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Federal Regulators Probing Subprime Auto Loans

Jaclyn Jaeger | November 6, 2014

Ally Financial recently became the latest auto-lending company to face a government investigation into its subprime auto lending practices, raising questions among some as to whether the next subprime crisis will come in the form of auto loans.

The Securities and Exchange Commission has requested documents from Ally “in connection with its investigation related to subprime automotive finance and related securitization activities,” the company disclosed in a filing last month.

Ally is just one of a handful of lenders to have received such a request from regulators in recent months. In July, the Department of Justice served GM Financial with a subpoena directing it to produce certain documents relating to GM Financial’s, its subsidiaries’, and affiliates’ origination and securitization of subprime automobile loans since 2007, the company...

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