General Motors Financial receives subpoena over subprime auto loans

General Motors' auto financing arm has received a subpoena from the Department of Justice. The US government is investigating General Motors Financial Co. over subprime auto loans that it made and securitized since 2007.

|
Jeff Kowalsky/Reuters/File
The General Motors logo is seen outside its headquarters at the Renaissance Center in Detroit, Michigan. The US government is investigating General Motors Co's auto financing arm over subprime auto loans it made and securitized since 2007, the company disclosed on Monday.

The US government is investigating General Motors Co's auto financing arm over subprime auto loans it made and securitized since 2007, the company disclosed on Monday.

General Motors Financial Co Inc said it was served with a subpoena from the Department of Justice directing it to turn over documents related to underwriting criteria. The subpoena was also disclosed in a SEC filing

The subpoena, which the company said was in connection with an investigation into possible violations of the civil fraud law FIRREA, also asked for information on the representations GM made about the criteria when the loans were pooled into securities.

Financial services firms have paid billions of dollars to resolve investigations under FIRREA into questionable mortgages pooled into securities in the run-up to the financial crisis. The new subpoena could be one of the first public acknowledgements that investigators are also looking at the securitization of subprime auto loans.

FIRREA, the Financial Institutions Reform, Recovery and Enforcement Act, allows the Justice Department to sue over fraud affecting a federally insured financial institution.

Separately, regulators have brought some recent cases against auto lenders over allegations of discrimination.

In December, GM's former financing arm, Ally Financial Inc, agreed to pay $98 million to resolve claims by the Justice Department and the US consumer bureau that it charged minority borrowers higher interest rates than white borrowers. General Motors Financial Co Inc, formerly known as AmeriCredit Corp., was acquired by GM in 2010.

(Reporting by Aruna Viswanatha in Washington and Sagarika Jaisinghani in Bangalore; Editing by Sriraj Kalluvila and Andrew Hay)

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to General Motors Financial receives subpoena over subprime auto loans
Read this article in
https://www.csmonitor.com/Business/Latest-News-Wires/2014/0804/General-Motors-Financial-receives-subpoena-over-subprime-auto-loans
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe