Wall Street bet big on predatory used-car loans for years. A crisis is now looming

Wall Street could always bank on used cars. In fact, for years, investors bought bonds backed by auto loans because they reliably produced handsome returns, even amid rocky markets and downturns in the economy.

But now, for the first time in decades, that winning streak appears to be coming to an end, with a half dozen prominent used-auto lenders facing either an avalanche of failed loans — or growing regulatory scrutiny. The Consumer Financial Protection Bureau is currently suing two of those lenders over potentially predatory practices.

Together, experts say, the woes could signal a significant blow to a key pillar of the U.S. economy.