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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Mark Sampson's exit leaves the FA still trying to convince itself of its own infallibility

Football's governing body won't be able to repair the damage to its reputation in silence.

By the end, it appeared as if Mark Sampson was weathering the storm.

Despite personal reflections that the uproar and scandal that has surrounded his recent tenure as England women's football manger was taking a toll, he seemed, as of Tuesday night, firmly ensconced in the post he had held since 2013.

Player Eniola Aluko’s claims of bullying and racism against the coach – given little backing from teammates and, on balance, disregarded by consecutive enquiries – remained a persistent story, yet talk of a fresh investigation were trumped in importance by Sampson’s continued presence at training and in the dugout.

The BBC’s occasionally rabid attachment to proceedings gave the saga prolonged oxygen, but when Sampson seemed to retain the FA’s support – taking charge of the Lionesses’ 6-0 win over Russia on Tuesday night – the worst appeared to be over.

With hindsight, the vultures were simply sharpening their talons.

Sampson’s sacking – less than 24 hours after that Russia game – came after a report was unearthed detailing a historic complaint against him from his time coaching Bristol Academy – a job he left to take up the England post.

In what has long become customary, the FA received these claims nearly four years ago yet failed to act definitively – initially concluding that their new coach was “not a safeguarding risk”. However as the recent crisis depended, the full details of these initial accusations were allegedly not revealed to senior leadership.

Confirming Sampson's departure on Wednesday, FA chief executive Martin Glenn carried a pained expression reminiscent of former incumbent Mark Palios, who, in another entry in the annals of great FA crises, resigned in 2004 as a result of an affair with FA secretary Faria Alam.

Glenn will hope that his own head is not sought in the weeks ahead as his conduct throughout the Sampson saga is probed.

It also marks yet another turbulent 12 months for the beleaguered governing body, who almost exactly a year ago to the day, parted company with England men’s coach Sam Allardyce after just a single game in charge – the former Bolton and Sunderland coach getting the bullet as a result of transfer advice offered to undercover journalists.

The Allardyce departure was handled with uncharacteristic efficiency – a symptom, perhaps, of the initial scepticism behind his appointment rather than any particular reflection on his crimes.

With clear-eyed judgement, it is difficult not to have a portion of sympathy for Sampson – who, cleared by those investigations, maintained the very visible backing of his squad – right up until Wednesday’s bitter denouement.

That he’s been paid in full for the three-year contract signed last summer speaks for how soft a line the FA took on the events that forced the sacking – hoping, perhaps, for as quiet an ending as possible for both parties.

Regrettably, for the FA at least, considerable damage to their reputation will not be something they can repair in silence – not in an era where women’s football enjoys such a high profile in the national consciousness and the body continues to mark itself an easy target for criticism. 

The exact contents of those 2014 allegations and that report are sure to be known down the line – non-disclosure agreements willing – but are as of now only conjecture and innuendo.

Without details, it’s difficult to know how hard to judge Sampson. The facts of his performance on the pitch mark him out as having been an accomplished coach. That is no longer the exclusive measure of success.

Detractors will murmur darkly about there being no smoke without fire, while his supporters will point to the unique nature of the job and the often confrontational elements of its duties.

Sampson, at 34, is still a relatively young man and may be able to coach again once the rancour has subsided – although with a reputation severely bloodied, will look on the two-year salary windfall with some gratitude.

Despite Glenn’s insistence that his former manager is “clear to work” in the sport, it’s hard to envisage his career ever resuming in the women’s game.

The FA itself is again left rudderless as it tries to convince itself of its own infallibility. Flabby management structures and the perception of being an antiquated country club – valid or not – will be revisited with relish.

Perhaps positively, it could herald a more honest conversation behind what success looks like for the national game as a whole. Inclusiveness and development of a robust culture are often the first words to disappear from the vocabulary once on field results start to falter.  

For once, the identity of the next coach is not the urgent dilemma facing the FA.

You can follow Cameron on Twitter here.