GM lowers criteria for car loans

I'm no financial analyst, but weren't relaxed lending standards a major factor in the sub-prime mortgage meltdown?

NEW YORK/DETROIT (Reuters) - General Motors Corp and its GMAC funding affiliate launched programs on Tuesday to lure U.S. car and truck buyers back into showrooms, as the nation's largest automaker tries to revive its sagging fortunes.

GMAC modified its credit criteria so that it could lend to a wider range of potential customers, two-and-a-half months after significantly curbing lending....

GMAC will now extend loans to retail customers with credit scores of 621 or higher, eliminating a restriction that required a score of 700.

Many analysts consider borrowers with a credit score of 620 or lower to be "subprime." The median U.S. credit score is 723, according to Fair Isaac Corp's myFICO unit....

"Federal aid to GMAC suggests the government is probably now so financially entangled in the GM complex that a Chapter 7 liquidation of (GM's auto operations) seems highly unlikely," JPMorgan analyst Himanshu Patel wrote.

What's good for the mortgage market is good for GM is good for America and all that fine shit. And note when reading the article that the subprime qualifiers are limited to purchasing the white elephant behemoths of SUV's and a few Saab models. Kudos on creatively combining crappy climate-killing vehicles with a pool of riskier borrowers who may prove unable to pay for them!

Update and correction: Yes, the original headline -- "GM to start loaning to subprime car buyers" -- was wrong because I misread the story, and I also eliminated one sentence in my concluding paragraph. Thanks to readers who pointed out the problems.

I still believe that relaxing lending standards for car buyers is an iffy proposition, echoing as it does the thinking behind the housing loans. But I'm skittish and probably wrong -- as I'm sure many of you will feel free to tell me. Have at it.