After recalling more than 30 million cars and facing a number of investigations, it’s probably safe to bet that General Motors Company would like to put 2014 in the rearview mirror. Before that’s possible the company will have to get through five more months and a new federal investigation into its financing unit regarding subprime auto loans.
According to Reuters, the Dept. of Justice issued subpoenas to GM regarding an investigation into the company’s possible violation of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), which prohibits the making of false statements to federally insured financial institutions.
The DOJ has used FIRREA to go after Wells Fargo for allegedly tricking the Federal Housing Authority into insuring toxic loans, and Bank of America for selling worthless loans to Fannie Mae and Freddie Mac.
The subpoena directs GM to turn over documents related to the underwriting criteria it used to make subprime auto loans since 2007, as well as, information about the representations GM made about the criteria when the loans were pooled into securities.
Reuters reports that while regulators have brought recent cases against auto lenders for allegations of discrimination, GM’s subpoena could be the first public acknowledgment by investigators into the securitization of subprime auto loans.
Last December, Ally Financial Inc, GM’s former financing unit, resolved Justice Dept. claims that it charged minorities higher interest rates than other borrowers by agreeing to pay $98 million.
GM unit gets subpoena over subprime auto loans [Chicago Tribune]