The return of subprime loans

What could possibly go wrong?

Proving that no-one ever really learns anything, the New York Times is reporting on the rebirth of subprime loans in the US:

Credit card lenders gave out 1.1 million new cards to borrowers with damaged credit in December, up 12.3 percent from the same month a year earlier, according to Equifax’s credit trends report released in March. These borrowers accounted for 23 percent of new auto loans in the fourth quarter of 2011, up from 17 percent in the same period of 2009, Experian, a credit scoring firm, said.

The situation isn't quite as bad as it was last time, however:

The push for subprime borrowers has not extended to the mortgage market, which remains closed to all but the most creditworthy.

The financial crash wasn't strictly caused by subprime mortgages, however. Instead, the blame usually falls at the feet of the "collateralised debt obligations", or CDOs, which were financial instruments created by bundling together these mortgages and selling them in tranches. The CDOs were then rated higher than they ever should (or would) have been if their provenance had been clearer. All of this was helped by a lax regulatory authority which only caught up with some of the outright deception involved long after the fact. (I should note that to call this a simplified version of the crisis would an understatement).

So at least this time none of that is happening. No, hang on, it is:

Auto loans are particularly attractive for lenders since they were largely untouched by many of the new regulations. The new Consumer Financial Protection Bureau said it had not yet decided whether it would oversee the largest nonbank auto lenders.

At the same time, the market for securities made up of bundles of auto loans is heating up. Last year, investors scooped up $11.7 billion in auto loan securities, up from $2.17 billion in 2008. The pace of securitization in credit cards is slower, with lenders selling roughly 30 percent of their card portfolios to investors, down from 60 percent before the financial crisis, according to S&P.

Worst of all, though, is the industry's terminology for their customers:

The lenders argue that they have learned their lesson and are distinguishing between chronic deadbeats and what some in the industry call “fallen angels,” those who had good payment histories before falling behind as the economy foundered.

If you aren't a fallen angel, you may be a rising star instead. Gag-inducing.

Counterfeit credit cards on display in France. Credit: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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Who's winning the European referendum? The Vicar of Dibley gives us a clue

These polls seem meaningless, but they reveal things more conventional ones miss.

At the weekend, YouGov released some polling on 30 fictional characters and their supposed views on Brexit.  If you calculate a net pro-Remain score (per cent thinking that person would back Remain minus the per cent thinking they’d vote for Leave), you have a list that is topped by Geraldine Granger, the Vicar of Dibley (+21), and ends with Jim Royle (-38).

It’s easy to mock this sort of thing, and plenty did: “pointless”, “polling jumping the shark”, and so on. Some even think pollsters ask daft questions just to generate cheap headlines. What a cynical world we live in.

But the answers to those questions tell you quite a lot, both about the referendum campaign and about voters in general.

For one thing, most of the fictional characters that people saw as voting to Remain are (broadly) nice people, whilst the Outers included a fair few you’d not want to be stuck in a lift with, along with other chancers and wasters. On one side, you have the Vicar of Dibley (+21), Mary Poppins (+13), Miranda (+11), and Dr Who (+9) taking on Hyacinth Bucket (-13), Tracy Barlow (-15), Del Boy (-28), and Basil Fawlty (-36) on the other. This isn’t really much of a contest.

Obviously, some of these are subjective judgements. Personally, I’d not want to be stuck in a lift with the Vicar of Dibley under any circumstances – but she’s clearly meant to be a broadly sympathetic character.  Ditto – with knobs on – Miranda. And yes, some of the Outer characters are more nuanced. Captain Mainwaring (-31) may be pompous and insecure, but he is a brave man doing his best for his country. But still, it’s hard not to see some sort of division here, between broadly good people (Remain) and some more flawed individuals (Out).

So, on one level, this offers a pretty good insight into how people see the campaigns.  It’s why polling companies ask these sort of left-field questions – like the famous Tin Man and Scarecrow question asked by John Zogby – because they can often get at something that normal questions might miss. Sure, they also generate easy publicity for the polling company – but life’s not binary: some things can generate cheap headlines and still be interesting.

But there are two caveats. First, when you look at the full data tables you find that the numbers saying Don’t Know to each of these questions are really big– as high as 55 per cent for both Tracy Barlow and Arthur Dent. The lowest is for both Basil Fawlty and Del Boy, but that’s still 34 per cent. For 26 out of the 30 characters, the plurality response was Don’t Know. The data don’t really show that the public think Captain Birdseye (-11) is for Out; when half of all respondents said they don’t know, they show that the public doesn’t really have a clue what Captain Birdseye thinks.

Much more importantly, second, when you look at the cross breaks, it becomes clear how much of this is being driven by people’s own partisan views. Take James Bond, for example. Overall, he was seen as slightly pro-Remain (+5). But he’s seen as pro-Brexit (-22) by Brexit voters, and pro-Remain (+30) by Remain voters.

The same split applies to Dr Who, Postman Pat, Sherlock Holmes, Miranda, and so on.

In fact, of the 30 characters YouGov polled about, there were just eleven where respondents from both sides of the debate agreed – and these eleven excluded almost all of the broadly positive characters.

So, here’s the ten characters where both Remain and Leave voters agreed would be for Brexit: Alan Partridge; Jim Royle; Del Boy; Hyacinth Bucket; Pat Butcher; Tracy Barlow; Captain Mainwaring; Catherine Tate’s Nan; Cruella De Vil; and Basil Fawlty.

That’s not a great roll call. And it must be saying something that even Outers think Cruella De Vil, Alan Patridge, and Hyacinth Bucket would be one of theirs.

Mind you, the only pro-Remain character that both sides agree on is Sir Humphrey Appleby. That’s not great either.

For the rest, everyone wants them for their own.

So what about those who say they don’t yet know how they will vote in the referendum? These might be the key swing voters, after all. Maybe they can give a more unbiased response. Turns out their ranking is broadly similar to the overall one – with scores that are somewhere between the views of the Outers and the Inners.

But with this group the figures for don’t knows get even bigger: 54 per cent at a minimum, rising to a massive 77 per cent for Arthur Dent.

And that’s because, lacking a partisan view about the referendum, they are not able to project this view onto fictional characters.  They lack, in the jargon, a heuristic enabling them to answer the question. Which tells you something about how most people answered the questions.

Philip Cowley is Professor of Politics at Queen Mary University of London.