GM Financial Says DOJ Seeks Subprime Loan Records
The Department of Justice has released that they subpoenaed all documents from the financial unit of General Motors Comp (GM), which is the largest U.S auto maker. They are wanting the records to all of GM’s Subprime lending loans. On the subpoena dated for July 28th, they have all documents that are related to the origination and securitization from the Subprime loans back to 2007. The justice department is also wanting records of the underwriting and warranties documents.
Chrissy Heinke, a spokeswoman for the company, stated that the DOJ is focused on the auto financial space in general. Not just the actual loans themselves. However, there have not been allegations set within the subpoena. GMF has been compliant with all they have requested.
Within the court investigation that is taking place, there has also been some federal interest regarding fatal defects with car parts. When something is recalled on a vehicle, there is a time frame that the law allows you to follow. If you do not follow the laws, then you will be investigated and possibly fined. GM Chief Executive Officer Mary Barra, is investigating the slow handling process for the potentially fatal defects that are associated with millions of cars.
Even with all the investigations currently taken place, there has been an increase of sales with the release of new vehicles. These new vehicles such as the Buick Encore and the Chevrolet Tahoe. But that is what people fail to notice. The public world does not understand that there are federal issues going on behind the scenes. All the public knows is that they are purchasing a new vehicle from a dealership. With so many advertising sales, people are more eager to purchase cars, now more than ever. It has been reported that this has been the best year in sales since 2006.
Within the federal investigation, there have been many loans that were offered which should have not been. Such as, the wealthy people were given lower interest rate and longer months to repay. However, if you were a minority, you were given a higher interest rate and a shorter repayment time. This was findings that the DOJ was looking for. This discrepancy is what started the lawsuit in the beginning.
The DOJ made it clear that the subpoena was to investigate the reasoning for a civil proceeding due to the potential violations of the FIRREA (Financial Institutions Reform, Recovery and Enforcement). There are more reasons as to why General Motors was being targeted for this investigation. As the story goes, if you don’t break the law, you have nothing to worry about. In this case, there were shady things happening behind the scenes of the financial department. Now there are legal actions that are being investigating because of it.