Category Archive: Automobile Credit


Automobile Credit


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Ben Bernanke: ‘A terrible, almost surreal moment’

From 2006 to 2014, Ben Bernanke served as the chairman of the US Federal Reserve, a period marked by the worst financial crisis since the Great Depression. His new book, The Courage to Act: A Memoir of a Crisis and its Aftermath, tells the story of the efforts by officials to halt the panic in 2008 and rescue the US economy. 

Q: Looking back, how close did the US come to experiencing another Great Depression?

A: I think the risk was quite high, based on historical experience and on the reaction of the economy to the intensification of the panic in the fall of 2008. We saw a tremendous contraction in jobs and GDP growth in the fourth quarter of 2008 and the first quarter of 2009, before the crisis was stabilized.

Q: At the time, did you think another Depression was looming?

A: I certainly thought it was a realistic possibility, and I don’t know how much of a probability of Depression you want before you work really hard to avoid it. I did think the collapse of the financial system would have serious effects on the economy, and what we saw in the fall of ’08 and the spring of ’09 confirmed how powerful those effects were.

Q: What was the darkest moment for you?

A: The worst moment was probably the famous Lehman weekend [Sept. 13 to 15, 2008], when I learned that, despite all our best efforts, we had no way to save Lehman. The concern was not about the company itself, but rather that its failure would greatly worsen the panic that was under way.

Q: In your book, you describe it as a “terrible, almost surreal moment,” and that America was staring “into the abyss.” What made that worse than other moments in the crisis?

A: It was the only case where we weren’t able to come up with some solution. Bear Stearns was acquired by JP Morgan with Fed help [on March 16, 2008]. We averted the kind of panic at that stage that we would get later in September ’08. And then, subsequently, we had very tough moments in September with AIG. But Lehman was the only big financial firm to collapse.

Q: That was 2008. The US has had interest rates at near zero for seven years. Monetary stimulus has added trillions to the Fed’s balance sheet. So why is the economy still so weak?

A: Well, the Fed can do two things: It can help the economy recover from recession, and it can keep inflation low and stable. Inflation is certainly low and stable–in fact, below the two per cent target–and, measured in unemployment and labour-market slack, the economy has made a lot of progress. The pace of growth is disappointingly slow, mostly because productivity growth has been very slow, which is not really something amenable to monetary policy. It comes from changes in technology, changes in worker skills and a variety of other things, but not monetary policy, in particular. You say the economy is so weak. It’s certainly not where we would like it to be, but if you compare it to Europe or Japan, other industrial economies, they have done much worse.

Q: Looking back, what would you have done differently in your response to the crisis?

A: If anything, it could have been even a bit more aggressive. I think the one point you could also make is that the Federal Reserve has been bearing most of the burden, and there are limits to what monetary policy can do. We would have been better off with a more balanced policy approach involving both monetary and fiscal policy.

Q: You wrote that you came to feel that the $787-billion stimulus plan [in 2008] was too small.

A: It was not only the initial stimulus, which was actually helpful, but, after 2010, fiscal policy got fairly contractionary, with almost no job growth in the public sector. Also, the fiscal policy-makers have actually been doing damage to the recovery, with things like coming close to not raising the debt ceiling.

Q: How much of a role should fiscal policy play at a time like this, when we’ve seen monetary policy so ineffective?

A: It depends on the fiscal condition of the country.  If you’re Greece, there’s not a lot of scope for using fiscal policy to help you grow, because you don’t have the fiscal space. But the United States could have been less restrictive on fiscal policy from 2010 to 2014. So if a country has scope to use fiscal policy, I think there’s an argument for having a better balance between monetary and fiscal policy.

Q: What about Canada?

A: I’m not just being coy; I don’t think I know enough about it to say anything smart.

Q: Let’s go back to before the crisis. You’ve taken heat for dismissing the housing bubble. How much of that was you not seeing the bubble, versus you not wanting to panic people by talking about it as such?

A: We certainly knew house prices were very high, and understood there was a good chance they would have to come back down. We also understood that subprime mortgages–I’m talking now about after I became chairman in 2006–were failing at increasing numbers. But what we missed was really the possibility that the losses in subprime mortgages would create a financial panic that would almost bring down the financial system. If it hadn’t been for the panic, I don’t think the implications for the broader economy would have been nearly so large.

Q: In the book, you argue that the panic itself caused more damage to the economy than the actual trigger, the housing bubble. But how can you separate the two, because the panic was a response to nobody knowing the value of those toxic assets created in the bubble?

A: That’s right, but financial panics typically start with some kind of trigger, which creates uncertainty. If the financial system is vulnerable or weak enough, it can spread into a forest fire of a panic. The fear of subprime losses led investors to stay away from any kind of credit product, even things like credit cards and automobile credit that actually did fine. So it was the panic throughout the system that was the really costly part of the collapse. Of course, the housing collapse was important, too, but the collapse in jobs didn’t happen until after Lehman, and then it was intense. Meanwhile, house prices actually weren’t falling very quickly, but after Lehman, and after the crisis intensified, that’s when house prices really began to fall sharply. So it was the intensification of the panic in September of ’08 that really led to the very sharp decline in the US economy.

Q: What damage did the bank bailouts do to Americans’ trust in the financial system?

A: There was certainly some negative political reaction, which I fully understand. People were very unhappy with the fact that the economy was doing so poorly, and they were having difficulty finding work or paying the bills. They were very resentful that it looked like the Wall Street firms were getting help, but they weren’t. So I’m totally sympathetic to that, and I understand the anger. I’m hopeful that as the economy gets better, and the rules that were put in place make the financial system safer, people will appreciate that what was done was necessary for the stability of the overall economy.

Q: In a recent interview, you said somebody should have gone to jail for causing the crisis. Why haven’t they?

A: What the Department of Justice [DOJ] did was essentially not prosecute or pursue individuals–not necessarily executives, but traders or anybody. Instead, they prosecuted or extracted fines from large financial institutions. If laws were broken, or if bad practices were promulgated, they were done by some individual. So the DOJ should have pursued the individuals.

Q: Yet the DOJ argued it would create financial uncertainty and hurt the economy.

A: That’s quite the contrary. Exacting big fines on big banks cuts into their capital and makes them a little bit less stable, whereas going after individuals shouldn’t have any adverse effect on the institutions themselves.

Q: The Bank of Canada has cut rates twice this year, as have other countries, making it harder for US exporters to compete. What challenge is this posing for the Fed?

A: Of course, weaker currencies abroad mean a strong dollar, and a stronger dollar, together with a weak global environment, is a drag on the US economy. So it’s important, as it affects overall levels of production and employment in the US It’s not the only factor. There are many domestic industries doing well in the United States, notwithstanding a strong dollar. But the Fed will have to pay attention to what’s happening outside the country and with the dollar, because exports are one of the sources of demand for US goods and services. So, to the extent that that’s slowing the US economy, that’s something that the Fed has to take into account.

Q: Is there a risk of currency wars?

A: No, I don’t think so. To the extent that a country changes its monetary policy and weakens its currency, that is going to take exports away from other countries, it’s true, but the easier monetary policy strengthens the domestic economy of that country. That’s actually an offset. It provides more demand for foreign goods and services. So the view held by the G7 and other international groups is that changes in currencies created by monetary policy are not a form of currency war.

Q: But isn’t there a risk of a race to the bottom as central banks cut to counter each other?

A: Again, they’re not working against each other. If two countries both ease monetary policy, their relative currencies shouldn’t change very much, because they’re both eased. But you get more demand in both, so you should get a win-win situation there.

Q: The US is already at zero, though; it can’t cut anymore.

A: It’s only a problem to the extent that it prevents the overall US economy from recovering. If the Fed determined, hypothetically, that because of the strong dollar, the US economy couldn’t recover, it could postpone any rate increases. That would amount to a form of easing.

Q: As a student of history, you know how the understanding of a crisis can change over ensuing decades. What do you hope your legacy will be when people look back at your time at the Fed?

A: I think we used the lessons of classic financial panics to understand and respond to this panic, and we demonstrated the importance of both a strong financial system and an effective response to a financial crisis. We did succeed in stopping the crisis and in helping the economy return to where we’re currently, about five per cent of employment, so that’s what we accomplished. We also increased the transparency of the Fed, for example, introducing things like press conferences and other kinds of public communication. And of course we demonstrated that even when interest rates get close to zero, there’s still more the Fed can do–we used quantitative easing and forward guidance to provide more stimulus and helped the economy recover.


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CFPB, DOJ enter into alleged ‘discretionary pricing’ discrimination consent …

The Consumer Financial Protection Bureau and Department of Justice recently entered into a Consent Order with an automobile finance company for alleged violations of the federal Equal Credit Opportunity Act, 15 USC. sect;sect; 1691 (ECOA), arising from the auto finance companys policies and practices allowing car dealer discretion for interest rate markups.

A copy of the consent order is available at:Link to Consent Order.

A copy of the related DOJ complaint is available at:Link to Complaint.

In connection with sales of cars on credit, car dealers frequently submit credit applications to auto finance companies on behalf of their customers. The auto finance company sets minimal interest buy rates for approved sales contracts that it will buy from car dealers, and informs the dealers of these buy rates. Auto finance companies often provide car dealers with discretion to mark up a consumers interest rate above the buy rates for certain types of transactions, and the finance company compensates the car dealer for the expected increased interest revenue to be derived from the dealer markups.

The CFPB and DOJ alleged that the finance company caused race and national origin discrimination in violation of the ECOA and its implementing regulation, Regulation B, 12 CFR. Part 1002, by allowing car dealers to include interest rate markups not based on the borrowers creditworthiness or other objective criteria related to the borrower risk.

The CFPB and DOJ further claimed the auto financers policy and practice of allowing this discretion, and by compensating dealers for the dealer markups without adequate controls and monitoring, was not justified by legitimate business needs that could not be reasonably achieved by means that were less disparate in their impact on protected groups.

The Consent Order noted the DOJ and the CFPB used a Bayesian Improved Surname Geocoding (BISG) method based on geographical and name census data to show alleged interest rate disparities of 36 basis points higher than similarly situated white car buyers for African-American car buyers, 28 basis points for Hispanic car buyers, and 25 basis points for Asian and/or Pacific Islander car buyers.

The Consent Order further asserts that the auto finance company did not monitor whether prohibited discrimination occurred for dealer markups, and did not employ adequate controls to prevent discrimination.

In addition, the Consent Order asserts that the policy and practice of allowing dealer markups without adequate controls and monitoring was not justified by legitimate business needs, and resulted in illegal discrimination on the basis of race and national origin.

Among other things, the Consent Order requires that the auto finance company:

  1. not engage in race or national origin discrimination in any aspect of dealer discretion in automobile credit sales pricing;
  2. implement a dealer compensation policy conforming with one of three described options to ensure compliance with the ECOA;
  3. make submissions for review by a compliance committee;
  4. deposit $24 million for redress to affected consumers and create a plan for remuneration; and
  5. retain business records for five years demonstrating compliance.

The Consent Order further released and discharged the auto finance company from all potential liability in the consent order, and the auto finance company was not assessed any monetary penalties.


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National debt a pressing problem; action needed from POTUS, politicians

While the federal budget deficit has decreased in the past few years, this decline follows an unprecedented increase in the deficit in prior years and remains high by historical standards. Today, public debt is more than 72 percent of our economy and is expected to rise, even with the economy poised to recover from the recent downturn. The Congressional Budget Office projects public debt will reach 78 percent of the economy by 2024. That is twice the historical average of 39 percent of the economy over the past 40 years.

Just 10 years from today, three-fourths of all federal spending will go to mandatory programs and interest on the debt. Higher federal debt translates into higher interest rates down the road and less capital available for small and mid-size businesses to borrow and invest. Families will then feel the effects of the rising debt as reduced investment can mean fewer jobs and lower wages, while higher interest rates will make home, automobile, credit cards and even college loans more expensive.

President Rutherford B. Hayes once stated, “Let every man, every corporation and especially let every village, town and city, every county and State, get out of debt and keep out of debt. It is the debtor that is ruined by hard times.”

Under current laws and operating practices, public debt will exceed the size of the economy by the late 2030s. If Congress continues to act irresponsibly and kick the can down the road, debt will reach even higher. As recently as 2007, debt was only 35 percent of the economy. The post-World War II average is about 40 percent. The growth in projected debt is due chiefly to the aging population and growing healthcare costs, resulting in increased Social Security and federal health spending. By 2045, 100 percent of federal revenue will go toward our major entitlement programs and interest on the debt.

There will be opportunities this year to reach agreements on deals that improve our fiscal situation. Those need to be approached with strong bipartisan support and a clear understanding of the importance of getting our fiscal house in order. We cannot and should not accept anything less than Congress making reduction of national debt a top priority. Additionally, President Obama needs to devote part of his final years as POTUS to reducing the burden of debt on this and future generations.

The Campaign to Fix the Debt is a non-partisan movement to put America on a better fiscal and economic path. More information about the movement can be found at

President George Washington once cautioned about the importance of “avoiding likewise the accumulation of debt, not only by shunning occasions of expense, but by vigorous exertions in time of peace to discharge the debts which unavoidable wars have occasioned, not ungenerously throwing upon posterity the burden which we ourselves ought to bear.”

We need to be active in raising the issue, holding our elected officials accountable for failure to take action, and ensuring our candidates for office not only understand the importance of this debilitating issue but are willing to do something novel by going to work on solving our national debt.

Jeff Wasden is president of the Colorado Business Roundtable.
He can be reached at


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Central bank says NPLs not expected to worsen in Q1

Non-performing loans (NPLs) are not expected to worsen in the first quarter given improved economic growth prospects, but consumer loans could rise moderately, says a senior Bank of Thailand official.

We have to concede that consumers need some time for their income to increase and make repayments [for their debt obligations], therefore there could be a rise in [NPLs of] consumer loans, said Jaturong Jantarangs, a senior director of the financial institutions strategy department.

But the pressure could be slightly eased by the declining trend in overall business NPLs, and the default rate in that segment is not high, while utility loans are expected to help drive better loan growth, he said.

Overall business NPLs shrank slightly to 193.7 billion baht in 2014 from 194 billion baht a year earlier.

Outstanding NPLs in 2014 stood at 277 billion baht, up by 11.5 billion baht from a year earlier, but gross NPLs remained at 2.15%, the same figure in 2013, while net NPLs rose slightly to 1.08% from 1% in 2013.

Consumer NPLs rose to 2.39% last year, up from 2.2% in 2013, on the back of an increase in bad loans for the automobile, credit card and personal loan segments.

Automobile NPLs rose to 2.5% from 2%, while NPLs in the credit card and personal loan segments increased by 3.2% and 2.5% from 2.6% and 2.3%, respectively.

Mr Jaturong said an accumulation of household debt prior to last years economic slowdown caused consumer income to decline and it is considered as an additional factor adding to the rise in last years consumer NPLs.

Outstanding special mention loans increased to 336.4 billion baht last year, up from 295.6 billion baht recorded in 2013, due mainly to loans provided to the manufacturing sector, rising to 5% from 4%.

The ratio of special mention loans to total loans increased by 2.6% in 2014, up from 2.4% in 2013.

Special mention loans are defined as 30 to 90 days overdue.

Last years total loan growth was registered at 5%, down from 11% recorded in 2013, due to the impact of the political turmoil in the first half, contracted export growth and swelling household debt.

Although the expansion of loan growth on an annual basis in last years fourth quarter dropped, quarter-on-quarter loan growth accelerated with the highest growth rateof2.9% in the fourth quarter, said Mr Jaturong.


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Joseph M. Giglio and Charles Chieppo: Millennials less car crazy than parents


The facts of General Motors’ recent troubles are well known: a storm of lawsuits and investigations resulting from mechanical failures that are linked to 13 driver deaths and over 13 million car and truck recalls worldwide so far this year. Now the big question is whether these setbacks will be fatal for the iconic American automaker.

One major factor GM must come to grips with is how the millennial generation is changing the American automobile market. These are the people born between 1983 and 2000, a great number of whom bear enormous student loan debt. In the aggregate, that debt is higher than either national credit card or automobile credit debt.

Perhaps that’s one reason millennials simply aren’t car as crazy as their predecessors were. The “sharing economy,” sustainability and an emphasis on public transportation, biking and walking, coupled with a keen interest in global climate change and fighting the obesity epidemic are some of the reasons why. This, in Trollope’s phrase, is “the way we live now.”

There is no agreed-upon definition, but “sustainable” first came to be used in the political arena to denote cities in which human needs are met without harm to the natural environment or sacrificing future generations’ ability to meet their own needs. It is doing a land office business with this crowd.

More than half the world’s population now lives in cities. By 2050 the number of people living in cities will have nearly doubled, from 3.6 billion in 2011 to more than 6 billion. It is estimated that up to 65 percent of global gross domestic product will be concentrated in the world’s 600 largest cities.

In the United States, the federal government has delineated 388 metropolitan statistical areas. The top 100 sit on 12 percent of the land mass, but are home to two-thirds of the population and generate some three-quarters of America’s GDP. According to the Federal Highway Administration, 67 percent of the 1.9 trillion vehicle miles traveled each year occur within urban areas. Urban centers are plainly the engines of the American economy.

Fortunately, technology is fundamentally changing the way people use transportation and improving metropolitan mobility. Advances are making it easier for people to navigate public bus and rail transportation, and personal ride-booking and car-sharing services are available in nearly every major American city. Smartphone applications, for example, let customers arrange transportation quickly, often eliminating the need for costly car ownership. One of the results of this is less driving.

With urbanization on the rise in America, failure to adapt to the new urban reality could be disastrous for firms facing unprecedented demographic, economic, social and environmental changes. The challenge for GM and other automakers is to find a way to adapt to the millennial lifestyle, but the nature of that lifestyle makes the task of predicting future demand for cars far more complicated.

For over four decades, adaptability has not exactly been GM’s strong suit. Indeed, the firm is facing the fallout from many years of questionable strategies. If future success means developing smaller, cheaper and more fuel-efficient vehicles, GM may have to wave goodbye to its current models and quickly evolve to satisfy changing consumer preferences that are illustrated by a new generation’s relationship to the automobile.

If lack of adaptability continues to be a weakness, GM is destined to go the way of the dial-up Internet connection.


Joseph M. Giglio is a professor of strategic management at Northeastern University’s College of Business Administration and Charles Chieppo is the principal of Chieppo Strategies.


Automobile Credit


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3 teens indicted for Athens car break-ins

A Clarke County grand jury indicts the three teenagers arrested for breaking into vehicles on and off the UGA campus.  

Joshua Conaway, Leon Pettyjohn and Gerald Thomas, Junior face charges including entering an automobile, credit card theft and fraud.  

UGA campus police investigators say the trio primarily targeted unlocked cars and trucks in UGA lots and decks and outside student housing last summer.  

The Athens Banner-Herald reports police were able to track down and arrest the suspects after Thomas allegedly used a stolen credit card at Walmart on Lexington Road. 

The theft ring allegedly stashed stolen loot including iPods, GPS, cash and other valuables at Pettyjohns house. 


Automobile Credit


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Domestic Board Certifies Legal Professional To Specific Team

Smith focuses on cases including compound legitimate concerns and also the vindication associated with plaintiffs privileges. His multimillion dollar funds as well as entendement add a circumstance towards the truck company for that manslaughter of any pickup truck auto technician, a considerable judgement towards a major car credit company involving scams, and a $2. 8 million decision against the Town of Darien in Connecticut with respect to the motorist who was struck with a tree over a city road.