All this undercuts a market of customers who have saved money, built wealth and acquired the means to repay. It flips the meaning of “success” and creates an upside-down economy built not on value, but on dictated results that in the end are unsustainable.
That the president’s highly touted rescue of GM was built on subprime lending is no surprise, given how he also champions subprime home and school loans. It’s an upside-down economy not built on value or merit.
Over the weekend, Investor’s Business Daily’s David Hogberg broke the news that 93% of General Motors’ 2012 profits were based on subprime loans, a revelation that put a damper on President Obama’s claims to have single-handedly rescued the automaker and restored it to financial health.
“GM Financial auto loans to customers with FICO scores below (the subprime threshold of) 660 rose from 87% of total loans in Q4 2010 to 93% in Q1 2012,” Hogberg found. “The worse the FICO score, the bigger the increase. From Q4 2010 to Q1 2012, GM Financial loans to customers with the worst FICO scores — below 540 — shot up 79% to more than $2.3 billion. … Prime loans, those above 660, dropped 42% to $676 million.”
This is not a sign of a sustainable comeback. It’s a recovery goosed by government fiat under the static condition of an economy that produces little but subprime buyers.
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