Washington —The Justice Department subpoenaed the lending unit of General Motors Co. as part of a review to determine if banks were misled into buying some auto loans, the Detroit automaker said Monday.
General Motors Financial Co. Inc. said in a securities filing it was served with a subpoena July 28 asking for documents related to the company’s and affiliates’ subprime auto loan originations and securitizations since 2007.
Auto lenders — including GM Financial — package loans by creditworthiness and sell them to banks and other investors in a process called “securitization.” The practice is used to assure that auto lenders that are lending billions of dollars have access to enough capital to lend large amounts of money at a relatively low price.
The filing said documents were demanded by the Justice Department which is looking at potential violations of the Financial Institutions Reform, Recovery and Enforcement Act of 1989. The investigation could lead to a civil suit.
In particular, the subpoena requested information about the underwriting criteria used to originate the auto loans and “the representations and warranties relating to those underwriting criteria that were made in connection with the securitization of the automobile loan contracts.”
Susan Sheffield, GM Financial executive vice president and treasurer, said in an email, “Our understanding is that the request is focused on the subprime auto finance space in general. There are no allegations set forth in the subpoena and GMF is cooperating with the request.”