Subprime Lender Tricolor Goes Under Amid Fraud Investigation
Tricolor Holdings, a subprime lender for auto loans, has collapsed.
Creditors are now scrambling to recover assets and minimize losses.
In Dallas, for example, bank employees are tracking down cars that are collateral and taking them to safe places.
Tricolor provided high-interest loans on cars, with many of its customers being undocumented workers. It filed for bankruptcy a week ago, and federal investigators are digging into the company to see if there was fraud.
From Bloomberg:
Signs are emerging that it [fraud] may have been widespread. Banks are exploring whether the same collateral was pledged to multiple lenders, while Fifth Third said last week that it believes the so-called master loan tape — the files that list key information like outstanding balances, credit scores and vehicle types — was “corrupted.” People familiar with the probes say the suspected manipulation stretches back months, possibly longer. The final answers will go a long way in determining not just how much creditors will recover of the billions they’re collectively owed, but also which of them get paid first.
The whole thing is a mess, especially since Tricolor has so many creditors.
Again, from Bloomberg: "The company listed more than 25,000 creditors, vendors and other affected parties in its bankruptcy filing."
Keep an eye on this one.
[Image: Studio Romantic/Shutterstock.com]
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Tim Healey grew up around the auto-parts business and has always had a love for cars — his parents joke his first word was “‘Vette”. Despite this, he wanted to pursue a career in sports writing but he ended up falling semi-accidentally into the automotive-journalism industry, first at Consumer Guide Automotive and later at Web2Carz.com. He also worked as an industry analyst at Mintel Group and freelanced for About.com, CarFax, Vehix.com, High Gear Media, Torque News, FutureCar.com, Cars.com, among others, and of course Vertical Scope sites such as AutoGuide.com, Off-Road.com, and HybridCars.com. He’s an urbanite and as such, doesn’t need a daily driver, but if he had one, it would be compact, sporty, and have a manual transmission.
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Tricolor provided high-interest loans on cars, with many of its customers being in the country against our laws.
Everyone involved in the running of Tricolor should be rounded up and put behind bars.
I don’t have a lot of sympathy for Tricolor’s creditors. They have the responsibility to properly evaluate risk of their investments. A provider of sub-prime auto loans is a sub-prime business by definition.
No surprise it went under.