By on December 31, 2009

The artist formerly known as GMAC

The underlying cause of GMAC’s failure was no different than so many other American financial institutions: giant bets on risky mortgages at the height of a real estate bubble. And though that error alone would have qualified GMAC for a bailout rescue along with the other failed banks, The WSJ reports that the ongoing support for GMAC is “reflects the troubled company’s importance to the revival of the auto industry.” And man, it had better be important. The GMAC bailout has been one of our least-favorite of the season, rewarding poor practices in auto and mortgage lending, and exposing taxpayers to inordinate risk. But, as TTAC warned back in the pre-bailout days, once the camel gets a nose into the tent, good luck getting it out. And so, GMAC will be receiving another $3.8b in TARP support, on top of the $12.5b it has already received. As a result, the US taxpayer’s stake in GMAC is expected to rise above the current 35 percent stake, just in time for more write-downs planned for the next week. The cash injection is said to prime GMAC for a profitable Q1 2010, erasing some giant losses in the bank’s ResCap mortgage unit. And of course the move will help GMAC continue to underwrite the leases that Chrysler and GM so desperately need, but can’t afford due to plummeting resales. GMAC’s bailout often doesn’t get marked up in the auto industry bailout tally, but at over $16b so far, it’s one of the crucial pieces keeping the zombie automakers shambling along. Now, about repayment…

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11 Comments on “Bailout Watch 579: GMAC To Score $3.5b More...”


  • avatar
    HerrKaLeun

    does tha tmean once “we”own 100% we won’t be injecting any more money since any injection increases our share? So then just 16.3 more billlion and we own 100%. but the way I know the government we will keep injecting money above that to own 200% or so….

  • avatar
    AccAzda

    CHRIST.

    At one end of the spectrum the media is telling us that GM is paying back their loan to the govt.. then we find out.. its only 1.4 or so of the 7bil that was loaned later.. to the US and CAN govts.

    Then we remember that the US govt gave (thank you blank check G.W Bush) some 15dig number.. to GM.. and then Autoblog acts surprised.. that the GOVT doesnt think they will ever get this back..

    Well no FUCKIN SHIT!!

    Ya pouring MONEY INTO A VAST HOLE.. with little to no expecation to EVER be profitable EVER again!

    Please.. give me another reason not to buy domestic / GM, please.
    Please.. I need another 15 reasons to hate the fuckin company.

    Best part is..
    Im guessing that 3.49mil is going to the mgt (who of couse need to have hefty salaries to keep the company talent).. yet it all winds up in the shitter in the end.

    Best part..
    Does this surprise.. anyone?

  • avatar
    brettc

    What is this “repayment” word that you speak of? I was under the impression that none of it was ever going to be repaid. It is GM after all.

  • avatar
    lilpoindexter

    Cerebrus put in 7.4 billion when they acquired 49% of GMAC…So far You and I the tax payer have put 16.3 Billion into this stinking mess….That my friends is how you make money. You nudge your buddies in congress to print money for you.

    Oh yeah…I’d take a Toyota with a “sticking gas pedal” over ANY GM EVER.

  • avatar
    kurkosdr

    Oh yeah…I’d take a Toyota with a “sticking gas pedal” over ANY GM EVER.

    Toyota started fixing the gas pedal problem. Now, about that powersteering problem on some GM cars….
    This is how GM got into this mess. As many TTAC readers know, it was not only the fact they were making unreliable cars, it also was the fact those jerks at the RenCen denied everything and blamed it all on “perception gap”.

    @ HerrKaLeun
    Easy, they are going to merge GMAC with some other company. So, if the new company’s shares are consisted, say, 55% of GMAC and 45% of that other company, then the government will have another 45% to cover. Then, they ‘ll rename the new company to GMAC. Rinse, repeat.

    An extreme senario, but nothing is too far fetched for me after witnessing what happened in the time periods known as Q4 2008 and 2009.

  • avatar
    AccAzda

    HMmmmm,

    GM blames their thousands of issues…. on ANYTHING other than their own fault.

    When gas was high.. and their sales tanked… oh its the customer who’s fault it is that they didnt buy their cars. Heck, every problem theyve had has been blamed on the customer… going back 30yrs… never mind the shitty interiors… or the execs who havent checked out a recent car since the Olds Cutless Supreme.

    As for as Toyota goes…
    They know how to make top selling cars.
    They know how to use platforms to benefit multiple vehicles of various sizes for any market on the globe.
    They also know how to use their factories to produce multiple vehicles.. i.e flezxible factories.
    They have whole books produced about their system for making cars… and mgt.
    They also as recently … produce boring as shit cars, with a man lineup consisting of SuVS / CUVS.

    They have also hidden issues..
    Pushed the Prius as the hybrid holy gral ..
    Their marketing dept.. has t be sme of the best paid fuckers…. PERIOD.
    But even the are running into some STIFF issues with: the Camry (and the sludge), the Tundra (with the gate, frame and build issues related to new San Antonio plant), they also have issues with the control boxes and pedals on everything on the Camry platform…

    All is not shiny and roses for Toyota… but Id still prefer them over GM. But… that dosnt mean Id buy a Toyota..

    They too.. have falen behind for what I want…. in a vehicle, besies all of the corporate issues..

  • avatar
    Robert.Walter

    GM should, post-haste, find out what lobbying organizations GMAC has, and put these on their payroll! 

    (Oops, I’m almost sorry to make this joke because I think the zomboids at GM would actually take this seriously …)

    Happy new year everybody!

  • avatar
    DangerousDave

    On the Ally website their moto is “Its your money, not ours.”  Damn Right! and I want it back!

    • 0 avatar
      mcs

      Also on the Ally website they mention certain gastro-intestinal side effects. Oh wait - my bad - that’s Alli. Silly me. I got them confused.

      http://www.allihcp.com/IntroAlli_Effects.aspx

  • avatar
    micanichi

    But I didn’t know I could have a real pony…

    • 0 avatar
      john.fritz

      If I see that commercial one more fucking time, I will Elvis my television. Given the opportunity, I would bitch slap that Alec Baldwin-looking motherfucker back into the Bronze Age.


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