Bailout Watch 129: GMAC "Approved to Participate" in Commercial Paper Funding Facility

Robert Farago
by Robert Farago
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bailout watch 129 gmac approved to participate in commercial paper funding

Yup, chalk-up another successful suckle on the federal teat, as Uncle Sam GM adds GMAC to the Commercial Paper Funding Facility. Reuters bears the glad tidings. “GMAC LLC, the auto and mortgage finance company, on Tuesday said it had been approved to use the commercial paper funding facility created earlier this month by the U.S. Federal Reserve with the aim of easing pressure on the corporate credit market.” Way-hey! Surprisingly (not), veteran GM spinmeister Gina Proia was a cagey as a canary on the deal’s specifics. For example, timing. “[GMAC] granted approval of its application ‘recently,’ Proia said.” And logistics. “Proia said GMAC would participate in the Fed’s borrowing window through its New Center Asset Trust (see: Bloomberg), a $10 billion asset-backed commercial paper facility. But she said GMAC would not discuss in a more detailed way how it planned to use the borrowing facility. ‘We are not discussing in any detail our participation in the Fed program,’ she said.” I agree! Why should the company benefitting from MY TAX MONEY tell me when, how, how much of it its hoovering? Hmmm. Something’s screwy here…

“The Fed program is aimed at borrowers with the highest ratings. GMAC is rated junk by Standard & Poor’s, Moody’s Investors Service and Fitch Ratings,” Bloomberg reports. “and both GM and GMAC have battled speculation about their survival. GM may face bankruptcy as the credit crunch drives down business, Standard & Poor’s analyst Robert Schulz has said. GMAC in June had to arrange more than $60 billion of credit for itself as foreclosures put the firm’s home mortgage unit on the brink of failure.” Friends in high places?

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  • Volvo Volvo on Oct 29, 2008

    Guess who owns 51% of GMAC? Cerebus, who owns Chrysler. Cerebus wants to sell Chrysler to GM in exchange for the other 49% of GMAC, then run to the treasury and sell the bad paper. Whattaya know, they end up $10B up and GM gets a lemon. Talk about crony capitalism. As I said before do a google search on links between ex treasury secretary Snow, current treasury secretary Paulson, Goldman Sachs, Cerberus and GMAC.

  • Nick Nick on Oct 29, 2008

    I am slightly dyslexic and first read the headline as 'GMAC approved to participate in commercial flypaper'. I figured, well, in the current saga of GM, who knows?

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  • Kwi65728132 I always did like the styling of the 300C and it was on my short list for a new (to me) rear wheel drive, naturally aspirated V8 luxury sedan but I found a Hyundai Equus that was better optioned than any 300C I could find and for several grand less.