Part 6/14:
Subprime Auto Loans and Fraudulent Securities: Companies like Trickleor Holdings, which lent to subprime auto buyers—often with questionable income sources, including illegal immigrants and non-English speakers—constructed asset-backed securities (ABS), akin to the mortgage-backed securities of yore. Recent filings for bankruptcy revealed that assets had been pledged multiple times, inflating perceived collateral value and obscuring actual risk.
Increased Losses and Overleveraging: Major banks like JP Morgan have exposure to these securities, with losses already expected to surpass hundreds of millions, potentially reaching into the billions across multiple institutions.