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Originally Posted by Dan40
The "cash for Clunkers Act" is the "Community Reinvestment Act," for cars instead of houses. It will do for Congress exactly what the CRA did for Congress. Buy votes from poor people. The unpleasant fact that it will put the poor in debt and screw the auto industry as bad as the CRA screwed up the home mortgage industry is just a shame, as long as the re-election votes come in.
Congress will come up with a "fix" for that problem when it can no longer be ignored [probably not so many years on this one]. The "FIX," of course, will not work as hoped..............................
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One of the problems with the mortgage industry was that they assumed that houses would keep on appreciating in value indefinitely, and then changed lending rules to along those assumptions.
I doubt that lenders are going to start assuming that cars will appreciate in value after you drive them off the lot. If anything some of the big suvs and trucks depreciated faster then expected when gas was over $4. And that messed up lenders who made leasing deals. Just think about the lender who takes back and then resell the cars when the lease is over. Many of the lease lenders could have been upside down when they needed to unload the returned vehicles.