Remember the sub-prime mortgage
fiasco a half dozen years ago? Remember the national financial meltdown of 2008
that created wretched investment and home equity losses for so many millions of
Americans, and threw millions of people out of work?
Remember the sleazy wizards of
Wall Street and investment professionals who figured out how to make billions
in profits while most folks were losing their shirts?
They’re still doing it.
Only this time it’s sub-prime
auto loans for used cars. Auto loans to folks who shouldn’t be borrowing money
have increased 130% in the past five years, says the New York Times.
As in, carefully marketed auto
loans for people who really have a poor credit history (thus, “sub-prime”), loans
with annual interest rates approaching 25 percent, with loan amounts that are
higher than (sometimes double) the actual value of the used cars these deluded
and desperate folks are trying to buy.
As in, packages of these loans,
with inadequate collateral, being sold to sophisticated and/or greedy investors
(including maybe your mutual fund or pension fund administrator) who are
clamoring for the high returns on their investments, who don’t know or don’t
care that the risk of non-payment on these loans is very high.
Folks, we’ve seen this movie
before, it doesn’t turn out well….
Why are financial and banking
regulators allowing this to happen? Who are they working for, anyway?
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