Friday, 11 August 2017 08:29

Dodd-Frank’s Weakness Has Caused a Bubble

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(New York)

Dodd-Frank is known as much for its flaws as it is for its successes. While many praise the relative health it has brought to big banks, it has been maligned for its overly complicated trading rules and its wounding of smaller banks. However, one its its other core weaknesses is an area it let slip—auto loans. Auto lenders were given a wide exemption in Dodd-Frank and that misstep has led to the auto loan bubble we have on our hands today. Loans have surged, there is much money to be made in putting people in cars they can’t afford, and banks are buying up the loans without much concern for whether people can pay them back.


FINSUM: Auto loans have surged in the way mortgages did before the Crisis and they are bound for a reckoning. The good news is that they are a MUCH smaller part of the US economy, so won’t cause the disruption we saw in 2008.

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