DOJ Probes Subprime Auto-Lending under FIRREA

August 12, 2014

Two of the largest subprime auto-lenders disclosed last week that they have received subpoenas from the U.S. Department of Justice (DOJ). The U.S. Attorney’s Office for the Southern District of New York is leading an investigation into the origination and securitization practices of subprime automobile lenders. The subpoenas were issued under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), which the government has used in recent years to extract large settlements in cases involving subprime mortgages. The government appears to suspect that the auto-lending industry suffers from deficiencies similar to those uncovered in residential mortgage-backed securities (RMBS) investigations.

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