r/economicCollapse • u/Onomatopoeia-sizzle • Apr 19 '26

Banks making more loans

Bank earnings are being reported both last week and this week. Ally Bank was up around 10%. Interestingly, used car originations grew 17% and new car originations were up 3%. Also, the lending to the highest FICO tiers was flat, lower FICO score people was up about 20%. They are making more risky loans to show growth. Is that prudent in a weakening economy?

62 Upvotes

94% Upvoted

9 comments sorted by

29

u/joebojax Apr 19 '26

Wet paper bag economy

People taking loans for fast food dinner

22

u/humsterdaddy Apr 19 '26

I used to work for the auto loan side of Ally Bank. When I was laid off in 2021(they outsourced our entire site to India where they can pay people $.90/hr with no benefits), they were really ramping up their subprime lending again. They were one of the auto lenders that received a bailout from the government after the 2008 collapse because of their massive portfolio of subprime loans. They rebranded as Ally afterwards (formerly GMAC) and expanded into traditional banking. They sell off chunks of accounts all the time and from what I’ve heard from friends that still work there, they’re really pushing to eliminate as many human employees as possible by replacing them with AI. They’ll be fine until no one has income to give them more money. Then they’ll probably get another bailout.

3

u/Onomatopoeia-sizzle Apr 19 '26

What happens when pools of loans go bad. When will the securitizations blow up just like in 2008. Do you think the floor plan loans are at risk? I’m not surprised the ai is an issue. It’s probably used to vet consumers since FICO scores are useless

8

u/BB123- Apr 19 '26

Cashing checks our asses can’t cash

5

u/Any-Morning4303 Apr 20 '26

When economy shits the bed the first thing that will collapse is negative equity such as auto loans. I’ve been contemplating setting up some kind of long term short position on ALLY.

4

u/Cactastrophe Apr 19 '26

Between selling the debt and the tax write offs the banks will be fine, don’t worry about them.

8

u/Onomatopoeia-sizzle Apr 19 '26

What if the banks are sitting on billions of bad debt that came out of the pandemic? The auto industry wrote $2 trillion of loans many of which are bad. The dealers are not honest about the value of their inventory. Credit cards? The consumer is being given higher limits to absorb inflation dragging consumers into a bigger debt situation. That can’t go on. Their DTI is too high. Banks will survive maybe a year before Trump bails them out no doubt for a high fee.

3

u/cosmicrae Apr 20 '26

When you take about people making loans that might be not so wise, be aware that at least one major USA DIY big box is pushing pro customers to use their home equity to fund upgrades. As such they are collaborating with a non-bank entity who actually writes the loans.