Amid financial turmoil, will lenders keep the subprime spigot open?

Most observers say the turmoil in the stock and other markets doesn’t directly affect car sales. What matters, they assert, is consumer confidence. If that holds steady, so will car sales.

But bank confidence matters, too.

So far this year, General Motors says 6.5 percent of its sales have been to subprime borrowers, above the industry’s 5.5 percent, thanks to accommodating financing partners GM Financial, Ally, USB and Wells Fargo.

Lenders should be willing to keep the spigot open. The Federal Reserve has pledged to keep the Fed funds rate at “historically low” levels, which will keep banks’ cost of funds down.

And banks already are sitting on reserves that are massively larger than historical averages: well over $1.6 trillion. Until 2009, those reserves held steady below $100 billion.

But banks can get just as skittish as consumers. Amid financial-market turmoil, warns Alec Gutierrez, Kelley Blue Book’s manager of vehicle valuation, “I could see banks going back to restricting” loans to subprime customers.

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