Wells Fargo, JPMorgan Wary of Auto Loans, Pack Them in Bonds
- The two banks among top underwriters of subprime auto bonds
- Both have less appetite for making the loans themselves
General Motors Co. (GM) Chevrolet vehicles are displayed for sale at Phillips Chevrolet car dealership in Frankfort, Illinois, U.S., on Thursday, April 30, 2015. Domestic and total vehicle sales figures are scheduled to be released on May 1.
Photographer: Daniel Acker/BloombergDepending whose money they’re using, Wells Fargo & Co. and JPMorgan Chase & Co. either love subprime car loans or fear them.
Both banks have grown more reluctant to make new subprime loans using money from their own balance sheets. Wells Fargo tightened its underwriting standards and slashed the volume of all loans it made to car buyers in the first quarter by 29 percent after greater numbers of borrowers fell behind on payments. JPMorgan’s consumer and community banking head Gordon Smith earlier this year said the bank had cut its new lending for subprime auto loans “dramatically.”