Focusing on G.M. Unit, U.S. Starts Civil Inquiry of Subprime Car Lending

[Purveyor]

By MICHAEL CORKERY and JESSICA SILVER-GREENBERG
August 4, 2014 9:23 pm

Federal prosecutors have begun a civil investigation into the booming business of subprime auto lending, focusing on the packaging and selling of questionable loans to investors.

The inquiry is being undertaken amid worries among some regulators that checks and standards are being neglected as the subprime auto loan market surges, in a small, yet disturbing, echo of the subprime mortgage crisis. Those concerns — and signs that some borrowers’ loan applications had false information about income and employment — were the subject of a front-page article in The New York Times last month. General Motors’ finance subsidiary disclosed in a securities filing on Monday that it had received a Justice Department subpoena for documents on the origination and the securitization of subprime loan contracts since 2007. The subpoena asks for the underwriting criteria and how the loans were represented to those who were pooling them and assembling securities to be sold to investors.

The office of Preet Bharara, the United States attorney for the Southern District of New York, also is looking at other companies, say people briefed on the matter. In the G.M. investigation, Mr. Bharara is reviewing whether the lender sold questionable auto-loan investments to investors, they said. At the center of the investigation, the people said, is whether the lender fully disclosed to investors the credit worthiness of the borrowers whose loans made up the complex securities.

It is unclear who else has been asked for information, but General Motors Financial also indicated that the inquiry was looking broadly at the subprime auto finance industry.

“Our understanding is that the request is focused on the subprime finance space in general,” Susan Sheffield, an executive vice president at G.M. Financial, said in an email on Monday. The company said it was cooperating with the prosecutors’ document request.

more...

http://dealbook.nytimes.com/2014/08/04/focusing-on-g-m-unit-u-s-starts-civil-inquiry-of-subprime-car-lending/?_php=true&_type=blogs&_r=0

[mahatmakanejeeves]

1. From the hometown paper,

which got the story from Bloomberg.

Justice Department looks at GM Financial's subprime auto loans

[ms.smiler]

2. This is just another branch of the securitization scam.

Mortgage loans, auto & student loans, even credit card debt is securitized and sold as investments. The banks have no skin in the game as their own money is not at risk. They set up borrowers with scam loans designed to fail, convert them to securities, collect large fees and commissions for managing those securities, and when they fail as designed, the banks collect their Credit Default Swaps, (insurance.)

There is nothing productive about this scheme nor is any value created, but it’s certainly profitable for banksters.

I just want to know the identities of the idiots who are still investing with these crooks.