What I can see is returning to loan approval standards of way way long ago- way back to those of the 90s and 80s.

That’s not bolshevism, it’s conservative banking. Under Bolshevism party members get 0% interest, and othere don’t. Also, party members get a car, while others wait in line.

But anyway, the reason bundling is a bad idea is the way they do it. They strip a lot of information out, and (at least in mortgage bundles) they even make it impossible to strip anything out of the bundle.

This is stupid. Why? Because if you can’t sell an individual loan out of the bundle, then each loan becomes worthless. The whole loses the value of the sum of it’s parts.

I suspect that future bundling will be easier to unwind because that kind of bundle will retain a higher value. The other kind are going to be junk until everyone forgets this lesson.

The securities markets are very tight, and looking at ABS paper backed by GM and Chrysler vehicles ain’t too reassuring these days, especially given that a bankruptcy of either or both companies would wipe out a good chunk of value in the underlying collateral – vehicles.

Whatever the reason, financing options on new domestic cars are getting tight and financing affordability is going down. This just adds more tension for vehicle buyers and lowers sales.

Ain’t nuttin’ yous can learn frum us Pinkos. You betcha!

When I first heard of the loan bundling thing that was going on in the USA, I simply couldn’t believe it. A friend of mine was selling cars in Georgia at a Chevy store. I went to visit him a couple of years ago and I was shocked to see scads of people named Billy-Bob going in and getting loans. Some of these loans were at 15% or more, often with sub-prime teasers. When I asked my friend what the default rate was, he said, “Hey, my business manager does the financing and I get paid, so I don’t care.” He then explained to me that GMAC bundled the loans and sold them anyway.

When I heard that was going on, I knew the USA was in deep crap. Such things are unheard of here in Soviet Canuckistan.

No. The lender is putting a stop to suicidal underwriting practices and attempting to refocus the business only on prudent and conservative traditional auto loans.

About time too. GM milked that fundamentally flawed revenue source too long.

The problem isn’t as much the banks being unwilling to lend, though they are, but that banks have gotten largely out of the business of making loans and carrying the loans on their own books. They have been bundling everything into bonds and selling those off to the next guy. Now, hardly anyone wants those bonds anymore. But, when the whole market seized up things went to crap.

Now, people who are actually in a good position to buy a new car can still get financed, but those who really shouldn’t be spending that kind of money … can’t! Substantial down payments of either cash or a trade-in which still has some real value are required. It is 1980 all over again in the consumer debt game. Back then a typical new car loan was for three years. At the end of three years the owner had some significant residual equity in the car, usually enough to take care of the down payment on a new one.

All in all, this new reality is a good thing, but the transition hitting all at once is damn painful. Whole industries were based on the ponzi scheme of consumers getting deeper and deeper into debts they really couldn’t afford to pay off.

Ding, time’s up!