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Wednesday, May 19, 2010

Automotive: Ready for another try at sub-prime?

A recent story from MSNBC suggests that General Motors revenue goals cannot be satisfied by well-qualified buyers… and since outside lending sources remain reluctant to borrow to sub-prime customers, GM is thinking about getting back into the banking business so they can write their own sub-prime paper. (At least, that’s my take on the matter; form your own opinion after reading this story from MSNBC.)

Implications: I’m wondering. Has the pain of borrowing to unqualified buyers already had time to fade enough that companies have forgotten how much it hurt? Were the bailout measures too effective at deflecting the pain from companies involved? Or has the market simply gone too far in how it defines “qualified buyer?”

Mike Anderson

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