Ally says SEC asked for info in probe
Ally Financial Inc. said the U.S. Securities and Exchange Commission approached the company for information in a probe of lending to car buyers with spotty credit.
“We recently received a document request from the SEC in connection with its investigation related to subprime automotive finance and related securitization activities,” the Detroit-based bank said today in a regulatory filing.
Regulators have been expanding scrutiny of subprime car lending as more borrowers fall behind on payments, and sales of bonds backed by their loans increase. General Motors Co. said Friday in a regulatory filing that its lending arm received a request for information from the SEC after disclosing last week it was subpoenaed by attorneys general of states it didn’t identify and other government offices. The U.S. Justice Department issued similar requests to GM Financial and Santander Consumer USA Holdings Inc. in August.
Ally “will respond accordingly to the SEC,” Gina Proia, a spokeswoman for the bank, said in an e-mailed statement.
Ally fell 0.1 cents to $22.70 Friday in New York. The shares have slid 12.6 percent this year, compared with the 12 percent advance of the 230-company Russell 1000 Financial Services Index.
The subprime-auto business is coming under increased scrutiny as concern mounts that lenders are lowering underwriting standards amid increased competition. New entrants flooded the business following the financial crisis to capitalize on cheap funding in the asset-backed securities market as lower interest rates push investors toward riskier assets.
Wall Street has sold $18.9 billion of such securities this year, on pace to become the busiest since 2006, when a record $27 billion was sold, according to data compiled by Bloomberg.
Late payments on the debt are rising even as sales of the securities surge. Payments at least 60 days late rose to 3.99 percent of outstanding debt in August, up from 3.63 percent a year earlier, Standard & Poor’s said in an Oct. 22 report.
With assistance from Elizabeth Dexheimer and Matt Robinson in New York.