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Subject:  Consumer Debt Article - Otter Date:  1/19/2001  6:16 PM
Author:  insomniactrader Number:  5964 of 10419

Excellent article.

One clarification though - The article says that Bank One's auto lease provision was for "abandoned car leases".

My understanding was that the loss reserve was set aside to deal with losses in residual value (i.e., the consumer pays off the lease, and when the bank sells the car at auction, it brings less "residual value" than originally anticipated. Since the pricing of the lease payments were based, in part, on this anticipated "residue", any shortfall is a loss in anticipated return.)

Am I mistaken on the purpose of the loss provision?
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