Tricolor and Treasury’s Seal of Approval

Wal Street Journal ^ | October 14, 2025 | WSJ Editorial Board

[karpov]

Subprime auto lender Tricolor Holdings’ bankruptcy is hitting big banks and asset managers. JPMorgan Chase on Tuesday reported a $170 million charge. One question: Did the federal government’s seal of approval for Tricolor cause investors to ignore hazard lights?

Tricolor caught creditors off guard when it filed for Chapter 7 bankruptcy last month. The Justice Department is reportedly investigating the lender for double-pledging collateral. But lapses in due diligence may also be to blame.

JPMorgan CEO Jamie Dimon admitted Tuesday that Tricolor was “not our finest moment.” He also warned the failure could portend more problems lurking in credit markets. “When you see one cockroach, there are probably more,” Mr. Dimon said. “Everyone should be forewarned on this one.” Sage advice.

In hindsight some of Tricolor’s problems appear obvious. A Tricolor bond offering this year showed that more than two-thirds of its borrowers lacked a credit score. For those with credit scores, the average was 614. More than half also didn’t have a driver’s license. Barron’s reported in 2022 on other problems.

For example, Texas regulators had cited Tricolor more than 130 times between 2019 and 2022, including for selling cars for which it didn’t hold title. The dealer also sold cars at prices on average 46% more than Kelley Blue Book’s “fair purchase price” value. Many customers defaulted in short order, resulting in cars being repossessed, which Tricolor then resold.

Yet the Treasury Department in 2019 designated Tricolor as a Community Development Financial Institution (CDFI). Congress established the program in 1994 with the goal of expanding credit for minority and lower-income folks. The CDFI designation makes businesses eligible for special grants. It can also lower their borrowing costs.

[karpov]

Full article. Banks should not be facilitating car loans to people who cannot legally drive.

[PeterPrinciple]

Did the federal government’s seal of approval for Tricolor cause investors to ignore hazard lights?

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That should be a warning to do you own due diligence................

[PeterPrinciple]

Community Development Financial Institution (CDFI). Congress established the program in 1994 with the goal of expanding credit for minority and lower-income folks. The CDFI designation makes businesses eligible for special grants. It can also lower their borrowing costs.

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read that slowly........................

govt fixing a problem.

[ridesthemiles]

EXACTLY

[ProtectOurFreedom]

Holy crap!

• 2/3 of its borrowers lacked a credit score
• those with a credit score averaged 614
• 50% of customers didn’t have a driver’s license
• sold cars for which it didn’t hold title
• car prices 46% more than KBB
• cars repossessed (no kidding) which Tricolor then resold
• the Treasury Department in 2019 designated Tricolor as a Community Development Financial Institution (CDFI) to expand credit for minority and lower-income folks. CDFI designation makes businesses eligible for special grants and can lower borrowing costs.

It's the subprime real estate debacle all over again but with cars. Every single time the do-gooder government steps in to "expand credit for minority and lower-income folks" this happens. Was there no Congressional oversight of what Treasury was doing?

That was Biden's damned administration at work.

[Valpal1]

Thieves enabling thieves to commit more thievery.

[ProtectOurFreedom]

Sums it up.

In the news, lying liars keep lying.

[SunkenCiv]

Sorkin acts like the Demagogic Party shill that he is, Joe busts him. Sorkin's got a book about 1929 (working on it for seven years, what a surprise). Good segment overall.

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Sidebar (JPM earnings): Stephanie Link, Hightower Advisors chief investment strategist and portfolio manager, joins 'Squawk Box' to discuss the company quarterly earnings results from JPMorgan Chase and Wells Fargo, latest market trends, and more. 

Hightower's Stephanie Link breaks down JPMorgan, Wells Fargo Q3 results | 6:56 
CNBC Television | 3.25M subscribers | 69,120 views | October 14, 2025

[catnipman]

i remember that at least a year ago, there were articles about the coming crash of subprime auto lenders ... apparently jamie dimon and the rest didn’t bother to read any of them ...

[faithhopecharity]

if there had been any genuine intent to help the poor and destitute get wheels,
they wouldn’t have sold them the cars 46% above Kelly blue book

this was a ripoff fraud operation from the git go, imho

[AZJeep]

If you cannot make the payment, you should NOT get the loan!
No if or buts.
Buy, when you are ready!
No government subsidies.

[ProtectOurFreedom]

There is no shortage of conmen who rip off the poor to get rich, is there? “Slumlords” were all the rage 100 years ago. 150 years ago, it was “snake oil salesmen” and carnies. “Come see the Egress...only 25¢”

Human nature is immutable. Unfortunately, many of those skunks get elected to Congress and go to work in Treasury and other bureaus that legalize theft.

[faithhopecharity]

using our taxpayer money (and government guarantees to be eventually paid by our taxes)
compounds the con-men problem

any government involvement should be directed to cleaning up the free marketplace of such con-men, not underwriting their ripoff schemes with our tax money

[faithhopecharity]

using our taxpayer money (and government guarantees to be eventually paid by our taxes)
compounds the con-men problem

any government involvement should be directed to cleaning up the free marketplace of such con-men, not underwriting their ripoff schemes with our tax money

[ProtectOurFreedom]

“any government involvement should be directed to cleaning up the free marketplace of such con-men, not underwriting their ripoff schemes with our tax money”

Well stated.