Over the past month, I’ve documented the imminent demise of the subprime auto bubble.
All of the signs are there:
- soaring auto debt, which now sits at ~$1.2 trillion in the US
- a booming securitization market with a record high percentage of total ABS comprised of deals from subprime lenders
- rising delinquencies
- more loans made to borrowers with low to non-existent FICOs
This, I argue, is 2006/2007 all over again only on a (mercifully) smaller scale.
With that in mind, consider the following anecdote submitted by a reader, presented here with no further comment:
I have a few accounts with TD Bank. I often frequent my local branch and enjoy talking with the branch manager. I stopped in Monday, and he asked me stop in his office before leaving. Upon completing our normal community lead program chatter, he asked me “Do you need $100k?”, after telling him no, and he knows better, as I am a cash guy. He informed me, that if they didn’t start loaning money, they would lose their rating. I accused him and the other banks of hoarding cash from bailouts, he agreed. But then he tells me, “I call it the, we don’t care SB Loan“, basically a No Doc. Informed me, “we only need tax returns, and current financial statement, which we won’t investigate“…
I laughed and told him I was having 2004-2007 deja vu.