GM Executive Doesn't Sound Very Worried About Subprime Auto Loans
On GM's earnings call about a week and a half ago, Bank of America Merrill Lynch analyst John Murphy asked GM CFO Chuck Stevens about GMF's subprime exposure. This was obviously before the Justice Department started sending out subpoenas, but Stevens sounded unworried in his response.
Here's the exchange, courtesy of the Seeking Alpha transcript of the call:
What catches the eye about the Justice Department action is that it requests documents back to 2007, more than year prior to GM's bailout and bankruptcy.
What's also interesting is that GM auto financing was in an odd place in 2007. The carmaker's longtime lending arm, GMAC, had been broken up into pieces and sold off, although GM still retained a chunk.
GM Financial, meanwhile, didn't actually exist. As Stevens noted in his reply to Murphy, the company was then operating as a different entity. GM bought AmeriCredit in 2010, to access subprime borrowers as the U.S. auto market recovered, and later changed the company's name.
But last year, GMF trimmed back its subprime business to focus more on prime borrowers, according to Automotive News' Jim Henry.
We'll keep tabs on this one. It's a more potentially negative news for GM, in the wake of a massive recall and, this past weekend, a deadly accident at one of the company's suppliers in China.