GMAC: Free At Last!

Co-dependent relationships are never pretty, and they usually end only when one half ends up in prison, the poorhouse or the morgue. With GM seemingly headed towards all three at once, its once-captive credit arm, GMAC, swears it will no longer play Tina to the General’s Ike. Automotive News [sub] quotes GMAC CFO Robert Hull as saying his firm plans to “shift GMAC from its captive roots to an independent deposit-funded lender and servicer.” As we reported earlier, changing GMAC’s status to a “Bank holding corporation” will give it access to the $700b TARP fund, but it also means that GM will have to exit the building. As in sell off its remaining 49 percent so that GMAC can rejoin society as a full-service bank, complete with FDIC insurance, credit cards, and a little dish of Werthers Originals by each teller. So GMAC will get taxpayer-funded security, and GM might even get a little cash out of the deal… but who loses? Why, the dealers, of course!

Staying alive until the TARPing comes has been job one at GMAC of late. To keep chugging towards the taxpayer-powered light at the end of the tunnel, GMAC has stopped leasing altogether, raised its credit requirements, and cut its loan volume dramatically. These measure have lead GM dealers to believe that GMAC is no longer there for them, as most customers no longer qualify for the lender’s beefed-up loan terms. To the point where Barclay’s analyst Brian Johnson claims that GM sales suffered last month because the automaker “wasn’t able to use GMAC financing to close the deal with its prospective buyers.” Now it seems that there’s a rumor circulating among GM dealers that GMAC is preparing to pull lines of floorplan credit from the one-third of its dealer clients with the lowest credit ratings. Though GMAC has already raised its floorplan interest rates, a spokesperson for the company says it is not planning a floorplan yank. Yet.