Wall Street Bet Big on Used-Car Loans for Years. Now a Crisis May Be Looming.
propublica.org
The used-car market’s hot streak may be ending as borrowers struggle to make payments and regulators say some auto lenders are “setting up consumers to fail.”
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It’s almost like sub prime loans are a bad idea for everyone.
Not really, a higher default risk has to pay a higher return because of higher defaults. It's priced in.
Sure, and why wouldn't they assume higher risk? The government will just bail them out if they lose those bets.
And then they default, and the loan holder is surprise pikachu face because who could have ever anticipated a subprime loan defaulting. Or worse who could have ever anticipated many of them doing it when the economy takes a minor downturn? It’s a gamble that they aren’t required to prepare for, and then they turn and stick their hand out for a bailout once the inevitable happens