Aug 04, 2012 3:32 PM GMT
hat the president's highly touted rescue of GM was built on subprime lending is no surprise, given how he also champions subprime home and school loans. It's an upside-down economy not built on value or merit.
Over the weekend, Investor's Business Daily's David Hogberg broke the news that 93% of General Motors' 2012 profits were based on subprime loans, a revelation that put a damper on President Obama's claims to have single-handedly rescued the automaker and restored it to financial health.
"GM Financial auto loans to customers with FICO scores below (the subprime threshold of) 660 rose from 87% of total loans in Q4 2010 to 93% in Q1 2012," Hogberg found. "The worse the FICO score, the bigger the increase. From Q4 2010 to Q1 2012, GM Financial loans to customers with the worst FICO scores — below 540 — shot up 79% to more than $2.3 billion. ... Prime loans, those above 660, dropped 42% to $676 million."
This is not a sign of a sustainable comeback. It's a recovery goosed by government fiat under the static condition of an economy that produces little but subprime buyers.