TTAC's Deep Throat: ResCap Crisis Threatens GMAC Car Loans
After reading Samir Syed’s Guide to the RESCAP/GMAC Crisis, TTAC's Deep Throat emailed to fit a missing piece of the puzzle. "The fear of a Rescap bankruptcy– or additional capital injections from GMAC– is weakenening GMAC’s own balance sheet and thus making it more difficult/expensive for its own financing. This in turn hurts GM’s dealers' ability to access GMAC for retail customers at competitive rates without massive rate subvention by GM… The cost of dealer wholesale financing is going through the roof. But it’s already happening, as smart lenders are poaching GM dealers for the better credit customers… and trying to win floor plan business (a huge uphill struggle as something like 80 percent or more of GM dealers use GMAC for wholesale. The bottom line: Moody’s is calling the future correctly with its downgrade."
More by Robert Farago
Comments
Join the conversation
GMAC like all other financial services companies is in the money markets on a daily and ongoing basis raising money to finance wholesale floor plans for dealers, retail finance for customers, leases for customers, whatever other loan facilities they offer. In the US the Feds have been lowering the prime rate, even if GMAC is borrowing at a higher cost its probably at the same rate than the loan its replacing. Is RESCAP impacting GMAC probably...who in the credit business in the US is not being impacted in one fashion or another? Does anyone in the US know where the bottom of the entire credit situation is located or when its going to hit bottom or did it hit bottom. BMW Financial just took a 372 Million write down for its inability to recoup residual values on leases.