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New Investment Opportunity; securitized used car loans
Topic Started: Nov 1 2011, 08:08 AM (152 Views)
Axtremus
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HOLY CARP!!!
(hat tip Steve Miller)

Article:

http://www.latimes.com/business/buy-here-pay-here/la-fi-buyhere-payhere-day-two-20111101,0,2598239,full.story

It's a story basically about used car dealers packaging their used car loans into securities and sell those securities to investors.

I find this part of the article particularly noteworthy:
Quote:
 
Although they're backed mainly by installment contracts signed by people who can't even qualify for a credit card, most of these bonds have been rated investment grade. Many have received the highest rating: AAA.

That's because rating firms believe that with tens of thousands of loans lumped together, the securities are safe even if some of the loans prove worthless.
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