Were Sub-Prime Loans Bad?

I wouldn't call GM a "taxpayer owned corporation". With taxpayers owning 26% of the shares, you could say the company is partially taxpayer owned.

I wonder where you got the figure that "78% of GM auto loans are likely future defaults." Perhap you are talking about "loans from GM Financial" and not *all* GM vehicle loans. There is a difference.

I looked it up and learned that "GM Financial auto loans to customers with FICO scores below 660 rose from 87% of total loans in Q4 2010 to 93% in Q1 2012." http://news.investors.com/business/072712-620090-g...

OK, that sounds bad, except that the same article states that "GM Financial provides just over 8% of GM's financing." This is because GM Financial specializes in subprime loans, but is not the lender in the majority of GM auto purchases. Typical GM vehicle buyers get their loans through their local dealers, and the dealers work with other financial institutions to provide the loans. For example, Wells Fargo has an agreement with GM dealers in western states to offer loans to the dealers' customers. Dealers can offer low down payments or great interest rates on normal vehicle loans to entice the customer, and whenever a buyer fails to meet the requirements for a standard loan, many dealers will offer to finance them through GM Financial (at a higher interest rate for the riskier loan.)

Still, that 8% represents a lot of loans, and lot of cash at risk. But will that lead to a car loan bubble that will burst? I doubt it. Transunion and Experian have been tracking this, and Transunion noted that "delinquencies of 60 days or greater -- those that are most likely to be written off -- hit a record low in the second quarter of 2012, for the second quarter in a row." http://www.autonews.com/apps/pbcs.dll/article?AID=...

Transunion's Peter Turek suggests a reason for the decrease in vehicle loan delinquencies:

"In a written statement today, Turek cited a TransUnion study conducted earlier this year. The study found that since the recession, consumers having trouble paying all their bills are putting car payments ahead of mortgage or credit card debt. That’s because they need their cars to get to work and keep their jobs. In previous downturns, mortgages had come first, Turek told Automotive News this year." http://www.autonews.com/apps/pbcs.dll/article?AID=...

it extremely is a few thing that the preferable flow media does not decide directly to speak approximately. The very own loan soften-down is blamed because of the fact the commencing reason for wall highway's crash. The very own loan soften-down became led to by ability of sub-top mortgages. Banks have been compelled, by ability of the government (Democrats) to make sub-top loans. it is the course Democrats and their information media do no longer decide on the well-known public to comprehend.

Yes, they were.

Democrats love creating bubbles. The housing bubble. Coming soon.......the student loan and the car loan bubbles. Watch closely for carbon trading bubble if cap and trade passes.

Any wonder why derivatives were not regulated? Now they will be trading bad car loans.

We need to give loans to people who can't pay those loans back to avoid stigmatizing them.

What could possibly go wrong? </sarcasm>