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Scott Jacobs/AP

Some on Wall Street are worried that subprime auto lenders like Credit Acceptance Corp, Ally Financial, and Santander will soon be in trouble, given reports that a rising share of borrowers with low credit scores are delinquent on their loans.

Auto lenders are behaving similarly to mortgage lenders in the run-up to the 2008 financial crash, but experts say we are not headed into another crisis (more below).

Why it's still cause for worry: Lenders are making fat profits, but there is growing evidence that a significant minority are engaging in fraudulent behavior. Borrowers in many cases have little choice but to pay such high rates if they want to be able to commute to work.

The case for concern:

  • It's a growing problem: One trend that has propped up this market is lengthening American commute times. As housing affordability in America's economic centers grows worse, the working poor and middle class are being pushed further away from city centers and reliable public transportation.
  • What to do about it: Two options are incentives to build more affordable housing and investing more in public transportation.

The case against concern:

  • It's actually pretty difficult for a lender to lose money on many of these subprime loans. The interest rates are high, typically in the low teens, but can rise as high as 29%. These payments cushion losses for lenders.
  • The auto-lending market is much smaller than the mortgage market. According to Experian, the total size of subprime auto loan debt outstanding is roughly $173 billion. By comparison, in 2006 alone, mortgage lenders made more than $600 billion in new loans.
  • Cars are easy to repossess, while homes are notoriously difficult, meaning auto lenders lose less money after a default.

Go deeper

Updated 45 mins ago - World

State Department orders evacuation of U.S. diplomats' families from Ukraine

From left, Under Secretary for Political Affairs Victoria Nuland, Secretary of State Antony Blinken and U.S. Chargés d'Affaires in Ukraine Kristina Kvien during a meeting with Prime Minister of Ukraine Denys Shmyhal in Kyiv. Photo: Yevhen Liubimov/ Ukrinform/Barcroft Media via Getty Images

The State Department will begin evacuating families and non-essential staff from the U.S. Embassy in Kyiv this week, according to a travel advisory published Sunday evening.

Why it matters: The move underscores U.S. fears that a Russian invasion could destabilize Ukraine and threaten embassy's ability to assist Americans.

Perfect storm brewing for extreme politicians

Data: Axios research; Table: Jacque Schrag/Axios

Redistricting and a flood of departing incumbents are paving the way for more extreme candidates in this year's midterm elections.

Driving the news: At least 19 House districts in 12 states are primed to attract such candidates — hard partisans running in strongly partisan districts — according to an Axios analysis of districts as measured by the Cook Political Report's Partisan Voter Index (PVI).

Updated 1 hour ago - Politics & Policy

Omicron dashboard

Illustration: Aïda Amer/Axios

  1. Health: Fauci: "Confident" Omicron cases will peak in February — FDA OKs antiviral drug remdesivir for non-hospitalized COVID patients — Walensky: CDC language "pivoting" on "fully vaccinated".
  2. Vaccines: Annual COVID vaccine preferable to boosters, says Pfizer CEO — Team USA 100% vaccinated against COVID ahead of Beijing Olympics.
  3. Politics: Arizona governor sues Biden administration over COVID funds tied to mandates — Biden concedes U.S. should have done more testing — Arizona says it "will not be intimidated" on anti-mask school policies.
  4. World: Beijing Olympic Committee lowers COVID testing threshold ahead of Games — Beijing officials urge COVID-19 "emergency mode" before Winter Olympics — Austria approves COVID vaccine mandate for adults.
  5. Variant tracker