There have been dozens of news reports, books and movies explaining how the United States should have seen the 2008 mortgage crisis coming — 2015's "The Big Short" scored a Best Picture nomination turning that warning into an A-list comedy. But, according to John Oliver, most Americans are missing another looming economic disaster.
On HBO's "Last Week Tonight" Sunday, Oliver explained that most of the American public is asleep at the wheel while subprime car loans in the auto lending industry are creating a bubble with frightening similarities to subprime mortgage crisis that pulled the U.S. economy into a deep recession.
"Nearly a quarter of all car loans are of the high-risk subprime variety. In fact, so many are being issued, they recently reached a 10-year high," Oliver said. "And if the phrase 'A boom in subprime loans' is making your eye twitch with flashbacks to the mortgage crisis, just wait — we will get there."
The comedian took viewers on a tour of the auto lending industry, pointing out how "buy here, pay here" dealers who do their own lending shell out car loans to customers with bad credit, use interest to collect thousands more dollars than a sold car is worth, and make money reselling the same car multiple times after repossessing it from in-over-their-head owners. Oliver highlighted one car that changed hands eight times in just three years thanks to constant repossessions and resales.
While Oliver admits that the market share of "buy here, pay here" dealers is going down, subprime car loans, high risk loans to buyers with bad credit, are on the rise. Oliver says that big banks are getting into the game for some eerily similar reasons to why big banks waded into the mortgage industry before the 2008 crisis.
"This feeding frenzy over subprime customers now includes big lenders like Santander and GM Financial ... And you might be wondering why the f--- is everyone in such a hurry to lend money to people with bad credit? Sure, in the mortgage crisis they were doing that so they could bundle those high risk loans together to sell them on Wall Street, but there is absolutely no way that is — that is happening again!"
Oliver hammered his point home by bringing out "Key & Peele" star Keegan Michael Key for a sketch in which the two comedian played slimy car dealers at Crazy Johnny's, offering too-good-to-be-true deals to buyers with horrible credit.