Northern Valley Beacon

Information, observations, and analysis from the James River valley on the Northern Plains----- E-Mail: Enter 'Beacon' in subject box. Send to: Minnekota@Referencedesk.org

Thursday, August 25, 2005

 

MetaBank reduces interest on Dan Nelson Auto loans

After a strange episode of accusations in some blogs a few weeks back on the John Thune-Dan Nelson-Metabank connections, we have not heard anything about the matter. Here is an AP story out of Des Moines that reveals how attorney generals who work in the public interest go about their work.

Bank to provide better loan terms to Dan Nelson Auto customers

Associated Press
DES MOINES, Iowa - About 1,400 customers of a former car dealership may get a better deal on their loans, including a lower interest rate, the Iowa attorney general's office announced Thursday.

The complete story is now printed in the Sioux Falls Argus Leader.
We ran the complete story off of a feed. As the story is copyrighted and restricted by the AP, go to this link to read the entire account:

http://hosted.ap.org/dynamic/stories/I/IA_SD_CAR_DEALER_SDOL-?SITE=SDSIO&SECTION=HOME&TEMPLATE=DEFAULT


On the Net: Iowa Attorney General: http://www.state.ia.us/government/ag
MetaBank: http://www.metabankonline.com/

Comments:
Dear David, thanks for mentioning the DNA/Metabank story, since the MSM, especially in Sioux Falls has absolutely no interest in the story unless it involves Dan Nelson himself.
The latest attempt by Metabank to present itself as a paragon of virtue, concerned about the consumers, is not believable even to those not well versed in the DNA/Metabank story.
In fact, at the CCI Predatory Car Sales Task Force meeting tonight in Des Moines, a Des Moines based bank president,(not Metabank)talked about the fact that Metabank was well aware of the business practices of Dan Nelson, some of which involve allegations of Violations of the Consumer Credit Code, Consumer Fraud, and Ongoing Criminal Conduct.
I can back up that statement with definitive financials that have been provided to me by former DNA corporate level management personnel.
This documented and verbally backed up information, clearly shows that Dan Nelson Auto Group and affiliated entities were losing money in 2003, more than a year before the restructuring of the business by Metabank.
All of the evidence is pointing to an alleged, well orchestrated Ponzi Scheme, with Metabank being the informed investor, and the other banks the uninformed investors. Metabank was not a lender as much a partner of Dan Nelson. The open line of credit allowed Dan to borrow against the receivables. Simply put, when a $3000.00 dollar "buy here/pay here" vehicle would be financed for $9000.00, Dan could borrow the $9000.00 even with a 35% across the board default rate on loans of this type. The agreement required DNA to make monthly reports to Metabank as well as host Metabank personnel monthly for inventory checks.
The biggest question is why would Metabank continue lending to an obviously failing business, that according to the financials I looked at, the "buy here/pay here" sales in 2003 equaled the charge offs? The customer's warranty repair contracts kept the E-Car Care busy, and the multiple shop visits for repair of the older, high mileage cars caused monetary losses even for this state of the art repair shop owned by Dan Nelson.
Millions of dollars in the "buy here/pay here" cars were documented each month, but South Dakota Acceptance Corporation as well as Dan Nelson Auto Group's finances got worse into 2004 leading up to the October 2004 restructuring. Dan Nelson was losing big time money, but the carte blanche lending signed, sealed and delivered by Metabank even allowed Dan to purchase some of the new car lines like Hyundai which was purchased in November 2004, when the business was nothing more than a shell game or a house of cards waiting to collapse. The Iowa Attorney General's lawsuit did not cause the demise of DNA, it was the alleged corrupt practices that took place at the Des Moines and Council Bluffs dealerships. More of the "buy here/pay here" cars were sold at those two locations than anywhere else(about 200 a month). The sales figures allowed a sale to be considered a sale regardless of the outcome of the deal. These vehicles were allegedly "churned",or continually sold and resold, and each time the down payment was kept. Alot of the time, the down payment was the only revenue earned on the car.
South Dakota Acceptance Corporation still in Chapter 11 bankruptcy, had contractual agreements with some of the finance companies who bought these loans individually as well as in bulk to take customer's payments and forward them to the company holding the loan. Metabank, although in control of the Dan Nelson Auto Group assets, following his bankruptcy being discharaged will not process the ACH payments made by the customers that are to be forwarded to the finance company holding their loan. These payments have been identified as such but customer payments haven't been sent by South Dakota Acceptance Corporation in some cases since April 20. These customers have been identified as being delinquent, through no fault of their own.
FSB, a big purchaser of DNA originated paper(retail installment agreements) has been working directly with me in my efforts to resolve complicated issues with these loans. One of the customers I have been working with has had her car in the repair shop in Rapid City for over a month. I was able to get FSB to authorize the repair work verbally, and this customer was able to pick up her car. These other finance companies who have purchased the loans from DNA have been very cooperative in trying to do whatever is necessary to satisfy the consumers.
Metabank is not a victim, and in fact, allegedly, through its partnership with Dan Nelson, victimized not only vulnerable consumers, but the other banks, as well as large and small corporations that will recoup their losses only by a Major Act of God.
The fiduciary responsibility of Metabank, as a federally insured(FDIC) savings and loan, and a publicly traded company(cash)doesn't allow for the significant lapses in judgement that enabled Dan Nelson through this open line of credit to continue operating a failing business.
I would hope that none of us will drink any more of the Kool Aid that Metabank has been serving.
Their alleged partnership in crime with Dan Nelson Auto Group is indefensible, and the other banks need to demand full disclosure from Metabank.
 
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