Treasury Makes Subprime Auto Loans

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Treasury Makes Subprime Auto Loans

One day after the treasury (taxpayers) injected $6 billion into the failing auto industry GM, GMAC ease lending rules to entice car buyers.

 

The bottom line is more taxpayer risk. Of course GM will proclaim those are "prime" loans because they are 1 FICO point above the minimum. This is the lipstick on a pig play once again.

 

The more money wasted on stupidity like this, the longer the recession, and the slower the recovery. There is only so much capital, and using that capital to keep failed business models alive is sickening.

[MTP'er]

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Are you confused?

[Makeastand]

I believe that 800 is a perfect credit rating so I would say 621 is too low to set the bar. IMHO it should be around 650, but still, 621 is supposedly above subprime (subprime loans helped get us into this recession).

 

It boils down to Cerberus. They are the same company who owns Chrysler, and they own 51% of GMAC. In order for GMAC, GM, and Chrysler to make money they need to sell cars. It gets frustrating when you cannot make a sell due to credit issues especially when they potential buyer makes enough money, but cannot qualify for a loan because he/she just paid off their bankruptcy last year, for instance.

 

Credit ratings can be deceptive also. A guy with great credit can finance a vehicle he cannot afford. The banks and lenders are too greedy and give people loans they know they cannot afford and/or charge outragous fees and rates (subprime). Thats what got us in this mess.

[MichiganTruck_Mafia]

This is happening because the Big 3 had better make loans available to Americans with decent credit and a job. The 700 score minimum was just too high for a many people in this economy. From what I hear, it's not too difficult to get a loan from Toyota, Honda, etc as long as you have a steady job. If the Big 3 won't finance these people, they will go elsewhere....

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This is happening because the Big 3 had better make loans available to Americans with decent credit and a job. The 700 score minimum was just too high for a many people in this economy. From what I hear, it's not too difficult to get a loan from Toyota, Honda, etc as long as you have a steady job. If the Big 3 won't finance these people, they will go elsewhere....

700, LOL, you have been listening to the news to much. That is the FEAR FACTOR they are throwing out. They are just not giving the EASY credit anymore and I don't blame them.

 

Here is an idea, start your own finance company and give these shaky loans out, you won't be around to long. That is unless the government bails you out.

 

When it was still just the houses they were talking about I remember a CEO, I think from Caldwell Banker was interviewed on CNBC and they said this same thing to him about the banks were not lending. He told them that there are loans available for people who were qualified, they quickly went to commercial and I didn't see him back.

[Makeastand]

Credit scores/ratings are lower than they have ever been among Americans. The liberal democrats pushed for equal lending to minorities and the poor, and banks/lending institutions took horrible advantage of this by offering "subprime" loans to applicants that they knew could not afford the loans. If you dont know what a subprime loan is, it is a loan usually with no money down and an unusually high intrest rate and/or fees.

 

What most people know but cannot fathom, is the fact that banks/lending institutions do not lend money, they make money. I don't mean they print money, they create it out of thin air.

 

Example: A bank has $100,000. The government says, a bank can "loan" 10 times the amount of money said bank actually possesses. So the bank can loan $1,000,000 by law. If the bank loans that money at 5% intrest for 10 years, over the term of the loan the bank will have pocketed $272,786 out of thin air, on top of the $900,000 that they didn’t even have. That would be $172,786 more than what they started with, plus $900,000! But now the government doesn’t care what the “actual cash on hand, to loan ratio” is, so the banks said lets make even more money with these new "sub prime loans". If that wasn't enough, the banks had another great idea by offering Mortgage Backed Securities or MBS's, only the banks aren't telling the investors what percentage of the MBS's are sub prime.

 

Yee haw, now everyone is fucked because the poor people the banks tried to take advantage of didn't pay up. Well, the banks aren’t really loosing any money, they just aren't creating it, which means the execs aren't getting huge bonuses. Now the GOP says amongst their selves "these banks are holding our money so if we bail them out, maybe they will pay us a little extra interest under the table.

 

Now the banks end up with billions of bailout dollars that they not only use to take lavish vacations with, but they use it to pay out more bonuses and pay out dividends to their investors (which by the way, the Big 2 are not allowed to do with their LOANS).

 

So here we are with two companies who are just trying to stay afloat in a recession that our government created. The Big 2 were given two small bridge loans with so many stipulations and regulations, and were set up for failure.

 

We all know that 621 is too low of a credit rating to take a chance on, but given the times and circumstances, what else were they supposed to do to sell cars?

 

Even if they built the most wonderful car ever, with the best quality and at the best value, it would not sell in this economy.

 

The American auto industry has been set up. Bush gave the Big 2 bridge loans so that they would not file bankruptcy on his watch, and hoped that the American people would forget all the dumb shit he done. The GOP voted down the bridge loans to satisfy their constituents (the transplants). Bush gave the LOANS with so many stipulations so that it would bring down organized labor and destroy the middle class.

 

I better stop here. I’m falling asleep and being long winded at the same time lol .

Sorry for the rant.

[MichiganTruck_Mafia]

Here is an idea, start your own finance company and give these shaky loans out, you won't be around to long. That is unless the government bails you out.

 

Sure, that's a realistic proposal. But if I get to do like the banks (get bailed out, use the money to give myself millions in undeserved bonuses, take lavish vacations, don't loan the money, etc), where do I sign up?

 

The bottom line is if the Big 3 didn't loosen their credit requirements, they would lose even more business to their competitors.

[MichiganTruck_Mafia]

The liberal democrats pushed for equal lending to minorities and the poor, and banks/lending institutions took horrible advantage of this by offering "subprime" loans to applicants that they knew could not afford the loans.

 

 

The "subprime" loans are only part of the problem.

 

There are many people who have/will lose their homes/cars because they:

 

1) Lost their job, and can't find another that pays as well (or find a job at all).

 

2) Kept their job, but had their hours/pay cut and can no longer afford the same standard of living.

 

1 & 2 are happening at a record pace in this country. It's no surprise why so many people are struggling.

Edited January 2, 2009 by MichiganTruck_Mafia

[Makeastand]

The "subprime" loans are only part of the problem.

 

There are many people who have/will lose their homes/cars because they:

 

1) Lost their job, and can't find another that pays as well (or find a job at all).

 

2) Kept their job, but had their hours/pay cut and can no longer afford the same standard of living.

 

1 & 2 are happening at a record pace in this country. It's no surprise why so many people are struggling.

 

Yes, you are so right.

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Can we all agree on the government is the main culprit in this whole mess?

 

Bailouts, Regulations and forcing people to borrow are not going to solve the problem.

[MichiganTruck_Mafia]

Can we all agree on the government is the main culprit in this whole mess?

 

Yes, no doubt about it. I was against this bailout crap from the beginning. But when Wall St. got their money, the slippery slope began.

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Yes, no doubt about it. I was against this bailout crap from the beginning. But when Wall St. got their money, the slippery slope began.

We should have a real stimulus. They throw a trillion here and a trillion there so why don't we just print 10 trillion and spread it out to everyone and live happily ever after?

 

The problems the states are soon going to face has not even started yet. I read somewhere that not even one state is doing good.

 

U.S. governors seek $1 trillion federal assistance

PHILADELPHIA (Reuters) - Governors of five U.S. states urged the federal government to provide $1 trillion in aid to the country's 50 states to help pay for education, welfare and infrastructure as states struggle with steep budget deficits amid a deepening recession.

 

Treasury Announces Targeted Investment Program of "Citi-Style" Rescues

The treasury has announced a fresh new wave of insanity called the Targeted Investment Program (TIP) in which the Treasury will mull Citi-style rescues on case-by-case basis.

 

Expect No Discretion:

 

1. The treasury has thrown thrown $350 billion around with no accounting.

2. The Treasury and Fed are facing class action suits under the freedom of information act for refusing to say how the money already allocated has been spent. See Bloomberg Sues Fed to Force Disclosure of Collateral. Also see FOX Business Network Sues the Treasury Department

3. The Treasury has committed billions more in funding than congress has allocated. See Paulson's $6 Billion Foot In The Door Play.

4. The Treasury Makes Subprime Auto Loans.

 

When the treasury says it will use "extreme discretion in order to improve market confidence" it really means there will absolutely no discretion; that it will do what it damn well wants, anytime it wants, whether it has the money to do so or not.

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Yes, no doubt about it. I was against this bailout crap from the beginning. But when Wall St. got their money, the slippery slope began.

Here is another problem that is still coming.

 

U.S. could be facing debt 'time bomb' this year

WASHINGTON - With President-elect Barack Obama and congressional Democrats considering a massive spending package aimed at pulling the nation out of recession, the national debt is projected to jump by as much as $2 trillion this year, an unprecedented increase that could test the world's appetite for financing U.S. government spending.It's almost always worse then they say also.

 

But about 40 percent of the debt held by private investors will mature in a year or less, according to Treasury officials. When those loans come due, the Treasury will have to borrow more money to repay them, even as it launches perhaps the most aggressive expansion of U.S. debt in modern history.

[ReDemption]

Please don’t forget the fact that the big 3’s future plans are to cut more jobs and close more plants. Our government actually liked hearing these types of statements in each of their turn around packages. I wonder how they (congress) thought that this type of action would help turn the economy around.

 

Here’s my 2 cents;

 

Our “in the toilet” economy will remain the same until:

1. Our American manufacturing jobs start returning (main reason for the loaning issue)

2. Heath care cost is lowered or national health care gets implemented. (main reason that the big 3 wont survive)

3. Our government helps with our manufacturing exported product as other countries do for theirs, as a form of direct tax rebate. (another

reason we lost manufacturing jobs to other countries)

4. NAFTA is revised to reflect a true equal agreement. (another reason they move manufacturing jobs to other countries)

5. The state Senators start giving the big 3 the same tax breaks and infrastructure money as they do our competitors.

 

Take a look at what Sen. Corker (TN) gave Nissan and VW. And he had the nerve to speak against helping the big 3.