Don’t Let Tricolor’s Bankruptcy Punish Underserved Borrowers
Photographer: Ash Ponders/Bloomberg
The implosion of subprime auto lender Tricolor Holdings has rocked America’s banking system. Even the mighty JPMorgan Chase & Co. failed to come away unscathed, recording a loss of $170 million on loans to the Dallas-based firm following its bankruptcy filing last month. Federal prosecutors are looking into allegations of fraud. “I probably shouldn’t say this, but when you see one cockroach, there are probably more,” Chief Executive Officer Jamie Dimon declared. “Everyone should be forewarned on this one.”
Mounting examples of lax credit underwriting led to 74 of the biggest US banks losing more than $100 billion of combined market value on Thursday alone. If finance history has taught us anything it’s that you can’t have a healthy economy without a healthy banking system. Are more Tricolors lurking, and can they be stopped before inflicting pain on vulnerable households, the banking system and the economy?