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

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?