Monday, July 21, 2014

They’re still doing it….



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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