General Motors Financial receives subpoena over subprime auto loans
General Motors' auto financing arm has received a subpoena from the Department of Justice. The US government is investigating General Motors Financial Co. over subprime auto loans that it made and securitized since 2007.
The US government is investigating General Motors Co's auto financing arm over subprime auto loans it made and securitized since 2007, the company disclosed on Monday.
General Motors Financial Co Inc said it was served with a subpoena from the Department of Justice directing it to turn over documents related to underwriting criteria. The subpoena was also disclosed in a SEC filing.
The subpoena, which the company said was in connection with an investigation into possible violations of the civil fraud law FIRREA, also asked for information on the representations GM made about the criteria when the loans were pooled into securities.
Financial services firms have paid billions of dollars to resolve investigations under FIRREA into questionable mortgages pooled into securities in the run-up to the financial crisis. The new subpoena could be one of the first public acknowledgements that investigators are also looking at the securitization of subprime auto loans.
FIRREA, the Financial Institutions Reform, Recovery and Enforcement Act, allows the Justice Department to sue over fraud affecting a federally insured financial institution.
Separately, regulators have brought some recent cases against auto lenders over allegations of discrimination.
In December, GM's former financing arm, Ally Financial Inc, agreed to pay $98 million to resolve claims by the Justice Department and the US consumer bureau that it charged minority borrowers higher interest rates than white borrowers. General Motors Financial Co Inc, formerly known as AmeriCredit Corp., was acquired by GM in 2010.
(Reporting by Aruna Viswanatha in Washington and Sagarika Jaisinghani in Bangalore; Editing by Sriraj Kalluvila and Andrew Hay)