Jul 17, 2017

A rise in risky, subprime auto loans

AP Photo/Alan Diaz

Subprime auto loans are on the rise — with the same easy loans and quick defaults that marked America's mortgage market before the financial crisis, Bloomberg reports.

Why it matters: While no one suggests this will lead to another economic collapse – primarily because auto subprime remains much smaller than mortgage subprime – the financial risks are being spread out in a similar manner. Moreover, it shows consumers and bankers haven't learned from past mistakes.

Timeline:

  • 2009: $2.5 billion new subprime auto bonds were sold.
  • 2013: U.S. car sales began to soar.
  • 2016, $26 billion new subprime auto bonds were sold — more than the pre-crisis average.

How it happened: The partnership between Fiat Chrysler and Santander Bank has made them kings of the subprime auto market and has gotten Santander into some legal trouble. Bloomberg went through court documents and filings to find that Santander vetted incomes of borrowers fewer than once for every 10 loans, which were then packaged into $1 billion bonds. It's also easy for dealers to find ways to approve low-income borrowers for auto loans that are too much for them. On top of that, Wall Street rewards these risky activities.

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Inside hackers' pivot to medical espionage

Illustration: Aïda Amer/Axios

A wave of cyber-spying around COVID-19 medical research is once more demonstrating the perils of treating cybersecurity as a separate, walled-off realm.

Driving the news: U.S. officials recently announced an uptick in Chinese-government affiliated hackers targeting medical research and other facilities in the United States for data on a potential COVID-19 cure or effective treatments to combat the virus. Additionally, “more than a dozen countries have redeployed military and intelligence hackers to glean whatever they can about other nations’ virus responses,” reports the New York Times.

The downsides of remote work

Data: Reproduced from Prudential/Morning Consult "Pulse of the American Worker Survey"; Chart: Axios Visuals

The coronavirus pandemic has forced a large-scale experiment in working from home. It has gone well enough that many companies are expanding their remote work expectations for the foreseeable future, and remote employees want to continue to work that way.

Yes, but: The downsides of remote work — less casual interaction with colleagues, an over-reliance on Zoom, lack of in-person collaboration and longer hours — could over time diminish the short-term gains.

Hong Kong's economic future hangs in the balance

Illustration: Sarah Grillo/Axios

As Beijing forces a sweeping national security law on Hong Kong, the once semi-autonomous city's status as one of Asia's largest financial hubs is at risk.

Why it matters: Political freedoms and strong rule of law helped make Hong Kong a thriving center for international banking and finance. But China's leaders may be betting that top firms in Hong Kong will trade some political freedoms for the economic prosperity Beijing can offer.