"GMAC is a Financial Black Hole Stuffed Into a Governance Black Box"
The mainstream media is beginning to wake up to GMAC’s seemingly endless call on the public purse. Thanks to chronic mismanagement—and an 11th hour, last-minute back room deal with The Fed and the US Treasury that turned the virtually bankrupt lender into a bank that couldn’t pass a stress test if it was doped-up to the eyeballs with Thorazine—GM’s former cash cow has become a cow-sized vampire bat, feasting on US taxpayers’ blood, sweat and tears. It’s sucked-up $6 billion in federal funding so far, heading for another . . . wait for it . . . $15.5 billion. The Wall Street Journal is shedding a little heat (not light) on this “hidden” auto bailout, which is heading for another one of those dumb-ass “your money for government equity in a born loser” jobs. Without the slightest hint of accountability.
“Put it together and what have you got?” Dennis K. Berman asks, resisting the urge to use a suitable rhetorical flourish (i.e., call someone an asshole). “A bank potentially owned and regulated by the government. One that is embarking on an ambitious merger in a troubled industry, directed by a board in flux. Looming above are a Congress and White House that have expressed little public care for strategy or accountability.” And TTAC is there.
Oh, and you may remember that no less a personage than the president of these here United States promised a pre-stress test financial refresh for GMAC, to fund ChryCo’s customers and dealers. Apparently, nobody checked the deal with Chrysler Financial, the company responsible for same. Well guess what? The AP reports that they still haven’t cleared the deal with the bankrupt automaker’s in-house finance company. But GMAC has requested permission from bankruptcy judge Arthur Gonzalez to shove ChryFi aside.
Why do I get the feeling the phrases “above board” and “transparency” are losing all meaning?
More by Robert Farago
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Well what else can our gov't do? I mean, GMAC is just too big to fail. The strangest part of the GMAC 'loan' deal is this: Why can't they sell more assets? According to their website, they own $189B in assets, as of Dec. 31 2008. http://www.gmacfs.com/
I cannot forecast the outcome of these shenanigans, because it is a riddle, wrapped in a mystery, inside an enigma. But I expect that along the way there will be toil as well as blood, tears and sweat. And it may come to be that if the American taxpayer's dollar lasts for a thousand years, men will still say "this was its insanest hour."