![]() When the inevitable recession arrived, the skeptics worried, subprime borrowers would revert from their unusually terrific payments record to the normal level of much higher delinquencies. That the announcement caused such backlash is somewhat surprising, given that jobs were plentiful, and low-income borrowers were making their payments most reliably, and suffering the fewest defaults, in decades.īut investors fretted that Ally was paying a big price at the peak of an unusually strong credit cycle. Ally’s shares slid 11.5% that day to their lowest level since 2014. ![]() When Ally Financial, the nation’s leading auto lender, announced that it was purchasing CardWorks for $2.65 billion on Feb. And their doubts recently helped scotch a big merger deal for CardWorks that would have brought Berman over $1 billion. Analysts and money managers are a lot more pessimistic. Still, his best bet is that the low-income consumers who lose their jobs first, but then get hired back fastest, will on a relative basis actually outperform middle-class borrowers through the crisis. ![]() Berman is no Pollyanna he warns that we won’t see the full picture until the waves of government support run out. The CEO of CardWorks, America’s second-biggest subprime credit card lender, tells Fortune that his customers learned plenty about the benefits of prudence from the financial crisis, and believe it or not, they’re in better shape than before the pandemic struck. No one in America better understands the risks and rewards of financing America’s wage-earning consumers-the folks locked out of traditional banking but hungry for credit-than Don Berman. ![]()
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