Back when GM was offering zero percent loans to anyone with a pulse (i.e. "sub-optimal" FICO credit scores), we warned that this policy would come back and bite the automaker in the ass. CNNMoney reports that GM's glutes are in peril. "Lehman Brothers analyst Brian Johnson said in a research note Monday that GMAC is experiencing a 'sharp' increase in delinquency rates among its auto-loan customers since July. 'The precursor of credit loss is delinquency- and the 60-day delinquency rate is on the rise for recent issues of GMAC auto (asset-backed securities),' Johnson said. He noted that, with unemployment low, 'the deterioration in auto ABS credit conditions may be evidence of a likely spill-over of the mortgage woes onto the auto credit world.'" This is serious stuff; hundreds of thousands of bad loans nearly sank Mitsubishi. GM spokeswoman Gina Proia admitted a "small to modest uptick in [auto loan] delinquencies" in the third quarter and said GMAC is closely monitoring the portfolio (whew!). "We have taken some steps such as reducing the production of non-prime loans in auto finance. We have also expanded the collection force and we have placed an increased emphasis on the initial verification of applicants, especially those in the lower tier." What was that about escaped horses and barn doors? Oh, and GM stock dropped to a 17-month low.
CNNMoney »
Source: “Anyone with a Pulse†Financing Returns to Haunt GM
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