It sounded, well, a little paranoid not quite two years ago, when subprime finance exec Kyle Birch told me he was worried about a stampede back to the subprime auto loan sector. At the time, in early 2010, the coming rush was obvious to Birch, but not to me. Since then, of course, several new players have made a mad dash into subprime.
For instance, GM bought Birch's employer, AmeriCredit, in October 2010, and renamed it GM Financial. Birch is still executive vice president of dealer services. Just a few weeks ago, private-equity firm Blackstone Group announced it was buying subprime specialist Exeter Finance Corp.
Another thing that worried Birch last year: New players would cut rates to gain share, forcing others to follow suit. Well, rates are down a bit.
Experian data show that in the second quarter, the average rate for nonprime used-car loans was 9.73 percent, down 66 basis points from a year earlier, or two-thirds of 1 percentage point.
That doesn't sound like much, but on the inside looking out, it's probably painful. Like they say, just because you're paranoid doesn't mean they aren't after you.