Investigations of the subprime auto finance business are spreading as General Motors Co. said its lending arm received additional subpoenas seeking details of its underwriting practices, Bloomberg News reported today. GM Financial, which specializes in loans to people with spotty credit, said in a regulatory filing yesterday that attorneys general of states it didn’t identify and other government offices are demanding documents related to its business of making car loans and pooling them into bonds that are sold to investors. The Detroit-based lender, along with Santander Consumer USA Holdings Inc., disclosed a similar probe by the U.S. Department of Justice in August. Both GM Financial and Santander issued new deals in September, one month after the Justice Department’s inquiry became public. Wall Street sold $17.7 billion of the bonds through Sept. 26, a pace that would make 2014 the busiest year since 2006 when a record $27 billion was issued, according to Barclays Plc. Subprime auto debt is still performing relatively well for investors, and new loans are still trailing behind the market’s peak in 2006, according to Loomis Sayles & Co. analysts led by Gary Mitchell. Lenders made $20.6 billion of the loans as of this year’s second quarter, up from $10.9 billion during the same period in 2010 and below the $27.5 billion of loans made in 2006, the analysts said in a report yesterday.
