A Collision Is Coming In Securitized Auto Debt

by David Kranzler
Investment Research Dynamics

Delinquencies on subprime auto debt packaged into securities reached a high not seen since October 1996, as late payments continued to worsen in February, according to Fitch Ratings.Bloomberg News

The Fed and the Obama Government inflated a massive bubble in automobile sales (among all the other bubbles). Over 30% of all auto loans over the past few years have been of the subprime variety. Not just “subprime” per se, but absolute nuclear waste. Low credit score borrowers have been able to buy used cars with loan terms well beyond 5 years AND loan-to-value amounts far greater than 100% of the assessed NADA used car value.

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