RE: Banks underwrite stupid auto loansFrank, I am not sure I understand your comments on car loans. The manufacturers underwrite the cost of the loan to lower the interest rate from prime +/- a fraction of a point to a rate low enough to attract buyers. The banks get the business and apply the additional funds to the loan utilizing standard accounting rules. Thi is just standard business for banks. There is nothing ominous here and the default rate in car loans is a miniscule percentage which would barely impact the set asides for bad debt that the banks declare each quarter.