Now it's time for our daily Bloomberg Law Brief, exploring legal issues in the news and Today, Bloomberg Law host During Grosso and Michael Best discussed the increasing number of US auto loan defaults and the chances it could turn into another sub prime loan crisis. They speak with Patricia McCoy, your, professor at Boston College Law School, and Gary Peoples, a professor at Syracuse University College of Law. Patricia, subprime car loans have been around for a long time. Explain what's
been happening in the last eight years or so. Well, they certainly have been around, and in the last last eight years, UH Auto Lending UM became the new growth area for subprime loans. UH mortgage lenders are basically not willing to make subprime loans anymore, but UM car dealers were very eager to expand their markets by selling cars to weaker and weaker borrowers and lenders stepped in willing to make loans to people who might have difficulty paying
back the purchase price as the car. Gary, are there any legal restrictions here in terms of who can get these kinds of loans when they buy a car, or is it kind of a free for all. It's it's pretty much a free for all. One of the interesting things about god Frank is the one area that was
left out of regulation were auto dealers. And auto dealers finance the vast majority of auto loans and then of course sell them uh to to finance companies, and they are specifically excluded from regulation and the god Frank so your regulation would be looking at would then be up to the state. And I, you know, I practiced in New York and even the general New York Usury Statute
doesn't apply to most auto loans. Patricia, the name of your book is the subprime viru is so with the auto loans, where do we see the virus or the cracks in the system. What's really interesting is we're seeing a replay of the mortgage crisis in terms of the dealers don't check whether the borrowers can uh have the ability to repay. The lender makes the loan without checking it in most cases here Santan Dare, and then the lender sells on the loans, packages them for sale to
Wall Street. Investors are not checking and are buying this stuff regardless of the elevated default risk. And as Patricia McCoy, your professor at Boston College Law School, and Gary People as a professor at Syracuse University College of Law, speaking with Bloomberg Law host During Rosso and Michael Best. You can listen to Bloomberg Law weekdays at one pm Wall
Street Time here on Bloomberg Radio Now. Among some of the top legal stories from Bloomberg Law, the American Civil Union has struck out in an attempt to open up President Trump's election Commission. Federal judge has denied the a c l US request for election Commission documents. The judge also denied in person access to the commission's meeting today.
The a c l U claims the election panel violates federal transparency and public access requirements, and as this morning's Bloomberg lawbry if you can find more legal news at Bloomberg Law dot com and Bloomberg na dot com. Attorneys will find exceptional legal research and business development tools there as well. Visit Bloomberg Law dot com and Bloomberg BNA dot com for more information