Taken from transcript, section on consumer finance...

PILGRIM: Tonight, the millions of middle class families already struggling to save their homes from foreclosure are also struggling to save their cars. Auto repossessions are nearing their highest level in a decade. Over the past year, auto repossessions are up 10 percent. Christine Romans reports.

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ROMANS: Meet Art and Cyro. Repo men, on their way to repossess a truck from an owner four months behind on payments. They'll take it back to Art Christiansen's repo lot. Like many across the country, full to capacity with vehicles Americans couldn't pay for.

ART CHRISTENSESN, COMMERCIAL SERVICES CORP.: They over finance with their homes, they over finance with the cars, over finance with the credit cards.

ROMANS: Like homes and credit cards, defaults on auto loans are skyrocketing. And car repossessions at this lot are up 25 percent to 30 percent. On all kinds of cars, including luxury vehicles.

Ratings agency, Fitch, sees rise in defaults not only on riskier sub prime car loans, but also on traditional prime loans, made to buyers with good credit. These defaults, a combination of loose lending, a weakening economy, and job losses. So repo lots are filling up as repossessions rise.

TOM WEBB, MANHEIM CONSULTING: We were up 10 percent in 2007. Probably up another seven percent to 10 percent this year, which would bring us up to the highest level in a decade. ROBERT MANNING, ROCHESTER INST. TECH.: And it shows us how severe the downturn in the American economy is becoming, that people are having to make a decision about whether to be able to afford to pay their car note or not.

ROMANS: The bottom line, people took out car notes they couldn't afford and lenders freely gave them.

MANNING: The reality of it is, of course, is that the consumer has to be responsible for their actions, but now we're going to find out where were the regulators and why were lenders making loans that they knew could not possibly be repaid?

ROMANS: The owner of this repoed truck said he just got behind in his payments.

CYRO MIRANDA, COMMERCIAL SERVICE CORP.: Today or tomorrow he's going to make his payments, pay the late fees, and he'll get his car back.

ROMANS: And that's exactly what he did.

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ROMANS: Of course, losing a car is the height of financial distress. For many, this is the ride to work. It's not just auto loans increasingly in trouble, Kitty. Credit card and student loan defaults are also rising right now.

PILGRIM: That's a very disturbing trend. Thank you very much, Christine Romans.

Well, the employers of more than half the workforce in this country, America's small businesses, are now being dragged into the mortgage and credit crisis. Tightened standards for loans and increased credit card interest rates are adding up to a bleak future for many who plan to strike out on their own.

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PILGRIM (voice-over): After 30 years in banking, small business owner Marilyn Landis now owns a financial consulting company. She's advising a client this week in New Hampshire. She runs a seven year old company with ten employees. But constant business travel expenses and a computer upgrade pushed her credit to the limits.

MARILYN LANDIS, SMALL BUSINESS OWNER: It's all billable, client pays me back, but my credit card balances have tripled, just simply with the amount of travel. Another credit card company, because my balances have gone up, it triggered an increase in interest rate of 20 percent in one credit card and another credit card reduced my credit line by half.

PILGRIM: About 30 percent of U.S. banks have toughened their small business lending standards, and 80 percent have tightened credit for commercial real estate loans. KAREN KERRIGAN, SMALL BUS. & ENTREPRENEURSHIP COUN.: The situation has become much, much more difficult. Whereas two years ago, where an individual may have used the equity on their home, that was good enough collateral to start a business, now banks are saying, look, that's not good enough. You not only need good collateral, but you also need a really solid business plan, and probably a flawless credit score as well.

PILGRIM: There is new evidence people are giving up their plans to start or expand a small business. And that is a problem for middle class Americans. More than 90 percent of new jobs in this economy are created by small businesses. But one in five banks reported a drop- off in inquiries for business credit over the last three months. And government-backed small business loans are down 14 percent from this time last year.

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PILGRIM: The small business association tracks the number of new loans to small businesses. The government backed lending program is the largest single source of long-term credit to businesses in the country. And new express loans in that program have fallen 23 percent from last year's levels.

This story ran on CNN on February 22, 2008.