Speaker 1: Now it's time for our daily Bloomberg Law Brief, exploring
Speaker 1: legal issues in the news and Today, Bloomberg Law host
Speaker 1: During Grosso and Michael Best discussed the increasing number of
Speaker 1: US auto loan defaults and the chances it could turn
Speaker 1: into another sub prime loan crisis. They speak with Patricia McCoy, your,
Speaker 1: professor at Boston College Law School, and Gary Peoples, a
Speaker 1: professor at Syracuse University College of Law. Patricia, subprime car
Speaker 1: loans have been around for a long time. Explain what's
Speaker 1: been happening in the last eight years or so. Well,
Speaker 1: they certainly have been around, and in the last last
Speaker 1: eight years, UH Auto Lending UM became the new growth
Speaker 1: area for subprime loans. UH mortgage lenders are basically not
Speaker 1: willing to make subprime loans anymore, but UM car dealers
Speaker 1: were very eager to expand their markets by selling cars
Speaker 1: to weaker and weaker borrowers and lenders stepped in willing
Speaker 1: to make loans to people who might have difficulty paying
Speaker 1: back the purchase price as the car. Gary, are there
Speaker 1: any legal restrictions here in terms of who can get
Speaker 1: these kinds of loans when they buy a car, or
Speaker 1: is it kind of a free for all. It's it's
Speaker 1: pretty much a free for all. One of the interesting
Speaker 1: things about god Frank is the one area that was
Speaker 1: left out of regulation were auto dealers. And auto dealers
Speaker 1: finance the vast majority of auto loans and then of
Speaker 1: course sell them uh to to finance companies, and they
Speaker 1: are specifically excluded from regulation and the god Frank so
Speaker 1: your regulation would be looking at would then be up
Speaker 1: to the state. And I, you know, I practiced in
Speaker 1: New York and even the general New York Usury Statute
Speaker 1: doesn't apply to most auto loans. Patricia, the name of
Speaker 1: your book is the subprime viru is so with the
Speaker 1: auto loans, where do we see the virus or the
Speaker 1: cracks in the system. What's really interesting is we're seeing
Speaker 1: a replay of the mortgage crisis in terms of the
Speaker 1: dealers don't check whether the borrowers can uh have the
Speaker 1: ability to repay. The lender makes the loan without checking
Speaker 1: it in most cases here Santan Dare, and then the
Speaker 1: lender sells on the loans, packages them for sale to
Speaker 1: Wall Street. Investors are not checking and are buying this
Speaker 1: stuff regardless of the elevated default risk. And as Patricia McCoy,
Speaker 1: your professor at Boston College Law School, and Gary People
Speaker 1: as a professor at Syracuse University College of Law, speaking
Speaker 1: with Bloomberg Law host During Rosso and Michael Best. You
Speaker 1: can listen to Bloomberg Law weekdays at one pm Wall
Speaker 1: Street Time here on Bloomberg Radio Now. Among some of
Speaker 1: the top legal stories from Bloomberg Law, the American Civil
Speaker 1: Union has struck out in an attempt to open up
Speaker 1: President Trump's election Commission. Federal judge has denied the a
Speaker 1: c l US request for election Commission documents. The judge
Speaker 1: also denied in person access to the commission's meeting today.
Speaker 1: The a c l U claims the election panel violates
Speaker 1: federal transparency and public access requirements, and as this morning's
Speaker 1: Bloomberg lawbry if you can find more legal news at
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Speaker 1: will find exceptional legal research and business development tools there
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