As our readers know, as far back as 2017, we sounded the alarm on the parallels between pre-crisis residential mortgage-backed securities (RMBS) and today’s subprime auto ABS.
Since then, we’ve shared the viewpoints of participants and analysts who have echoed reasons for concern and the competing reasons for disregarding those concerns. Despite all of the differences of opinions, however, and as we noted recently, there has consistently been widespread concern in the market that a macroeconomic shock could severely impact vulnerable auto subprime borrowers’ ability to pay.