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As Inventor of Subprime Car Loans Exits, Critics Smell a Lemon

  • Don Foss’s creation takes on more risk to maintain loan volume
  • Short sellers flock as car values decline, delinquencies rise
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/Bloomberg

When Don Foss was inducted into his industry’s hall of fame in 2015, he was adamant he wasn’t retiring. Addressing a Las Vegas audience of easy-credit used-car dealers who lauded him for creating the subprime auto-loan business, he said, “I’m just getting started.”

Last summer, however, the 72-year-old billionaire sold Carite Corp., a chain of used-car dealerships that he founded in 2011. In January he stepped down as chairman of Credit Acceptance Corp., the company he started in 1972 that pioneered extending auto loans to customers with rock-bottom credit scores or none at all. A month after he left, he sold a big chunk of his Credit Acceptance shares for $128 million.