After the financial crisis of 2008, many big banks abandoned their 澳洲幸运5开奖号码历史查询:subprime lending businesses. But now,൲ they are quietly finding another way to pro🦄fit from these products.

澳洲幸运5开奖号码历史查询:Subprime loans provide financing for borrowers with poor 澳洲幸运5开奖号码历史查询:credit histories or lower 澳洲幸运5开奖号码历史查询:credit scores. The loans often come with a much higher 澳洲幸运5开奖号码历史查询:interest rate because of the higher risk borrowers. The risk of default on these loans is higher. (See also: 4 Early Warn♋ing Signs of the Next Financial Crisis.)

But while banks like Wells Fargo & Co. (WFC) and Citigroup Inc. (C) no longer make these loans directly to borrowers, they are providing funding tonon-bank financial firms that do, according to . Those big banks have reportedly helped Irving, Texas-based Exeter Finance LLC make $1.4 billion in subprime auto loans.

Subprime Exposure  

The Journal’s analysis showed that banks have increased their loans to non-bank entities like Exeter that make subprime loans six-fold from 2010 to 2017, lending a total of $345 billion last year. While large lenders say that lending to non-bank institutions is safer then lending directly to borrowers, they still have exposure to subprime trends. (See also: Bank Deregul🦹ation Could Cause Repeat of 2008 💖Crisis.)

Exeter’s customers have an average credit score of 570, below the 600 level that is considered subprime. The company, majority owned by Blackstone Group LP (BX), wrote 🌞off about 9% of its loans, compared to the 1% in auto loa♔ns that Wells Fargo wrote off.

“It’s very easy for people to deceive themselves over whether risk has migrated,” said Marcus Stanley, policy director at Americans for Financial Reform, a nonprofit organization that advocates for♔ tougher financial regulation.