Fueled by investors seeking better returns, the sub-prime auto market has been heating up. The lenders find people with marginal credit ratings and put up the money for them to buy cars at high interest rates. The loans are then packaged and syndicated to investors. The problem is that those packaged loans may be much more risky than their “ratings” would suggest.

You may not own such loans directly, but they could be in your portfolio through a mutual fund or pension fund. Even your bank accounts could be at risk if you carry a large enough balance.

“If you are in a poker game and after 20 minutes you don’t know who the patsy is, then you’re the patsy.” (attributed to Warren Buffett)

Investment Riches Built on Subprime Auto Loans to Poor – NYTimes.com.