Every month I see scores of new examples where big banks are finding ways to remain connected to sub-prime lending. This month is no different. Citigroup, Wells Fargo, and
Bank of America all renewed or extended new credit agreements with major sub-prime players.
Citigroup extended a $1 million revolving line of credit to Consumer Portfolio Services (CPSS), a debt collection agency from Irvine, California. CPSS will pay 6 percent plus LIBOR. The line is collateralized by sub-prime auto loan receivables.
Bank of America announced a new credit agreement with Corinthian Colleges. Corinthian is a private for-profit education corporation. Their subsidiaries include Everest College. The deal brings $140 million in financing to Corinthian. B of A acted as administrative agent, swing line lender, and issuer. In 2009, more than 20 percent of former Everest College students defaulted on their student loans within two years of leaving the school.