the internet boom version and not the present day version I hope is what you meant

Either one works for me. I'm an old guy. ;-)

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"Politics is just show business for ugly people."

You can still have standards

I could. But where's the fun in that? ;-)

You obviously weren't here back when I went into my five-year exile and Slowtwitch siesta. LOL!

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"Politics is just show business for ugly people."

Nope but I was trading back when she was the money honey

Ah, that's right. She was, indeed, the Money Honey. :-)

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"Politics is just show business for ugly people."

I hate the phrase "predatory lending". It implies that people are helpless herd-animals exploited by powerful carnivores. No one forced those folks to buy a car they couldn't afford and accept a terrible interest rate. It's not up to "the enlightened" to play nanny and try to prevent knuckleheads from making bad decisions nor protect them from the consequences of their bad decisions. This modern idea that it's a reasonable role of government to prevent bad decisions or insulate folks from the consequences of bad decisions, does a lot of damage. We, as a culture, need to help people learn to make better decisions by allowing them to feel the consequences of their decisions. The alternative is not just a people that want to be taken care of, the alternative is a people that need to be taken care of. With only the most noble of intentions, we will have screwed people up good.

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Books @ Amazon
"If only he had used his genius for niceness, instead of Evil." M. Smart

The government's role is not to prevent bad decisions or insulate folks from their consequences. It is to ensure that consumers have the real facts they need to make an informed decision and are not subjected to undue pressure or unscrupulous manipulation. I'll admit, there's a fine line between a legitimate hard sell and providing false information (or at least inflated information), but it should definitely be the role of government to try to define where that line is. Unfortunately, government doesn't seem to be very good or very consistent in this role.

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''The enemy isn't conservatism. The enemy isn't liberalism. The enemy is bulls**t.''

—Lars-Erik Nelson

Can you in fact supply a single reference or article that supports your position? Because I've done a fair amount of reading about the 2008 crisis, and I really don't remember "panic selling" as a primary cause, nor that of simply supply and demand.

Lastly, I've asked you before, and I'll ask you again: Is it your position that the value of the bonds was essentially sound, but that increased supply and diminished demand is what drove their value down?

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Taco cat spelled backwards is....taco cat.

I agree. But we're not really talking about the seller failing to live up to the contract, we're talking about the buyer either attempting to buy a car they can't afford, or signing a contract this is not competitive, or both. People get outraged at the entirely legal behavior of the seller as if they've done something evil, when in fact, all they've done is enter into a contract with a consenting adult. That's why there's all sorts of laws re. Payday Lending, Title Loans, etc. in every state. Heck, even military bases have rules forbidding personnel from going into certain establishments because of "predatory lending". Protecting people from making bad decisions, or protecting them from the consequences of their bad decisions, only ensures that we get more bad decisions. Consequences is how we learn.

As you can no doubt tell, I'm kinda obsessive re. personal responsibility.

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Books @ Amazon
"If only he had used his genius for niceness, instead of Evil." M. Smart

I doubt he can provide such an article. There was definite forced selling to meet margin calls in September but there was no real panic selling except maybe the flash crash.

Spot, Windywave..... sorry guys this is really just too dumb.
References that....
1) Bond prices are set by supply and demand?
2) That there was panic selling in the bond markets in 2008?

Hey I am flexible.
Have fun.

IOW...no, you have absolutely nothing to back up what you are saying, and in fact appear to have no clue what caused the 2008 crisis. Yeah, have fun bro in your fantasy land.

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Taco cat spelled backwards is....taco cat.

So I haven't logged on or looked at ST for almost a year but did so today & had 20 PM's and one of them referenced this thread. Yes, it is old, but I thought I'd address some off the points made as this industry has been the darling of NYT hit pieces over the past year +.

Predatory lending: love that term, but where exactly is that line? If the default rates on some of these loans to extremely high risk customers are in excess of 50% losses vs what was contracted, there is no business model that works unless a substantially higher rate is charged to offset the risk (and yes, I will absolutely concede that the higher rates may (and MAY is a very, very gray area.....as most of these low FICO/high risk customers have years of credit history where they haven't paid many/any of their creditors (much less apartment leases, water bills, cable bills, Columbia House.....etc)). I personally think payday lenders and most title loan companies are predatory---100%++ interest rates are absurd. BUT....the cost to actually make these type of loans is extremely high too (both in terms of losses & origination spend).

Subprime bubble: no, sorry, not this time. This cycle, and I've been involved in the industry since 1993, is very, very cyclical. We are coming to the end of the current cycle which began coming out of the recession. But unlike a couple of the previous blow-ups (which you've probably never heard of b/c subprime is a very, very small piece of the overall auto finance market), this end-of-cycle (EOC) is a balloon deflating, not a bang. There have been 20-30 lenders of various sizes that have shuttered their doors this past 18-24 months. No market collapse. No panic. Just the capital markets and the lenders that finance our industry adjusting to the cycle & curtailing risk thru deleveraging. Or in the case of the latest casualty, Gateway One (owned by TFC Bank), they simply weren't profitable enough. We've looked at 6 different companies this past year as we have been in acquisition mode & only bought 1. The one we bought was highly profitable. The others were....well when you lose $30m in 4 years of PE $$, I would say distressed is the ceiling, not the floor. And they weren't even the worst.

Market forces: yes the ABS (asset backed securities) securitizations are what keep the industry humming. Please find one that has failed, ever. Even during the recession they performed. Auto ABS is significantly different than the mortg ABS that helped fuel the 2007 recession. There is more than enough data, history, and spreads to ensure that the buyers of these issuances are fairly well protected--though the lowest class/highest return of some of these are really close to junk bond level--but they still perform.

Customers/dealers: BK is right (ouch)--most reputable new/used car dealerships are looking at long-term repeat business, and when you consider the scope of some of these operations (CarMax, AutoNation, etc) where they are publicly held and absolutely sensitive to customer reviews/ratings, they aren't scumbag operations. Those do exist--but in this day & age they don't last long. Small used car dealers can't get the financing they need, and if they are selling bad cars (b/c 40-50% of defaults occur in this segment where the car breaks down) the lenders they depend on will cut them off. Fraud is our biggest concern with these guys, but most of the major auto-buying states have very active enforcement units to protect the customer/finance company. Even at the federal level---we worked with another finco that I used to run this past spring & with the help of the FBI the owner is sitting in jail & facing multiple felony charges. But all that being said, it is the customer want factor that drives the various issues that become public. We try and be a need-based lender (want is a first-time-buyer or chronic credit abuser wanting to buy a high-line unit (BMW, MBZ, Jaguar, Caddy (all which have the highest default rates for used cars))); 50% of our portfolio is Honda, Toyota, Nissan, Ford, and especially pickup trucks and work (commercial) vehicles.

Back to predatory: part of the current down-cycle my industry is in is because of the success of it in helping customers rebuild their credit. The most profitable years of our industry were 2009-2011: the recession destroyed consumers credit & those previous 700+ FICO customers became sub-prime when they lost their jobs/houses. A huge part of the reason for the # of companies failing in our industry is because the pool of subprime customers has become much, much smaller. 4 years ago there was a virtual ocean of bad credit customers. Now after 6+ years of readily available credit is is maybe a large pond, and those customers in that pond are true subprime (repeat repos, serial credit abusers, never-pays); the credit available via the private & public subprime lenders have helped a substantial % of those affected by the recession to rebuild their credit & rejoin the prime ranks. Studies have born this out--google Westlake & improved credit scores for the article.

Happy to answer any questions on the industry/business.

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"There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs." John Rogers

Awesome insights. I honestly didn't know you were in the auto loan portfolio side of the business. You are the man, sir.

Also: Sorry about all that back-and-forth I mostly instigated with you. It was wrong and I apologize.

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"Politics is just show business for ugly people."

Welcome back, when the dust settles would love to hear your recap of that fateful Nov 8th day.

And I have trying to tell folks exactly what you just did about the auto loan industry, nice to see someone inside sharing my views. Simply put a car is not a house, so even if for some reason that seems implausible at this moment a 1/4 of all loans went belly up, the banks would survive. Some loan companies would of course not fare too well, but they are not going to cause a crash in the entire system like housing did..

BWIKYA (figure it out) I was out. Recession brought me back in. When WL sold to Maruben @ $1.2b valuation, coincided with the recession + collapse of US dollar + collapse of Aussie wine biz.....well I got calls & got back in.

As I stated back when, you & I are good as long as no bwahahahahahaa. I guess. Too tired & removed from LR to care. Today was literally the 3rd "I have to do nothing or I'm going to die" day in the past year. Just happened to logon. Glad to see you are back. Hope all is well. BTW, we probably live within 10 miles of each other. I'm now b/t Lone Pine & Long Lake in BH. Been a very busy year.....

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"There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs." John Rogers

Heh. I haven't done the "bwahahahahahahahahaha!" thing since coming back. It was an asinine thing to do. And I remembered your enjoinder about that.

Good to see you're back and I hope you're killing it in the biz and with a massive pay plan, sir. And like I've said; you always had great insights.

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"Politics is just show business for ugly people."