Subprime Auto Loans? Didn’t We Learn Our Lesson?

J.J. Jackson | July 28, 2012 

GM turning it around?  Maybe not so much.  After taking billions of taxpayer dollars in bailout funds because the company and its unions refused to reform into profitable business model, GM has apparently been “turning around” much in the same way the housing market was brought to a bubble state before bursting – by using subprime loans.

In fact, according to the company’s reports, 93% of the company’s auto loans in the first quarter of 2012 were subprime!  $4.3 billion of the company’s loans were below a FICO score of 540.  Subprime is anything under 660.  Contrast that with just $676 million in loans to those with better credit scores , AKA “Prime”, over 660.

With GM making almost all its money on people who are considered high risk, can it continue to remain solvent?  The housing market couldn’t do it.

But, I guess when you get in bed with the government, you do what the government wants.  And what the government wants is for GM to make a lot of loans to those most likely to default.  It’s sort of like a new welfare program if you want to look at it clearly.

Copyright © 2006-2011
J.J. Jackson is a libertarian conservative author from Pittsburgh, PA who has been writing and promoting individual liberty since 1993 and is President of Land of the Free Studios, Inc. He is the Pittsburgh Conservative Examiner for Examiner.com. He is also the owner of The Right Things - Conservative T-shirts & Gifts. His weekly commentary along with exclusives not available anywhere else can be found at LibertyReborn.com (Digital Fingerprint: libertyreborn123456789)


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