The first sign of danger came early last year, when RBC's Aaron warned investors that loan delinquency rates were rising faster than normal, to more than 4%.
While Harley trimmed production in response to slowing sales, it continued to go after marginal borrowers with promotions like 2007's "Stick it to the Man" campaign, which offered zero money down and teaser interest rates as low as 2.9%.
As long as HDFS could package loans and sell them as securities to investors, the strategy worked.
Image: A 2003 Harley-Davidson model displayed during the Harley-Davidson 100th Anniversary | Photograph: Daniel Berehulak/Getty Images
Also read: Bank rescue: Making Wall Street pay?
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