Back in the day (i.e. last fall), larger banks in the US went through a rite of passage. It was called the “we don’t do subprime lending” declaration. The banks made the declaration to avoid being tarred-and-feathered as lending heathens.
Banks are doing another mea culpa these days. Only this time it is called the “we don’t do auto finance” declaration. Oh, how far we have fallen.
I heard this mea culpa several times this week from executives at some of our nation’s most august banks. (Wait, are any US banks still “august”?) They made their assertions to Wall Street investors at a conference I attended, and it was jarring. In my opinion, the auto finance industry’s priority today is not protecting itself from more regulation (that’s No. 2 on my list), it is resuscitating its image with the investment community.
There was an exception to this lambasting. US Bancorp’s CEO Richard Davis adamantly reiterated his bank’s plan to stick with auto finance, saying it has been in the auto finance business since the 1950s and it will stay in the business through this downturn. Davis was the lone cry in a swirling storm, a storm that is beginning to drown out business logic as well.
