Bailout Watch 311: GMAC Missed Bank Conversion Target By $8.8b
I know this is The Truth About Cars, not the inside baseball truth about the finance companies that prop-up the domestic automobile manufacturers. Dot com. But we’ve been following this story because, well, if GMAC had gone down, GM would have gone down and GM still makes cars. Well, after the holidays. And the shenanigans involving the federal government’s rescue of GMAC have been nothing less than shameful. First, Uncle Sugar signals GMAC in no uncertain terms that if the bankruptcy-bound lender doesn’t convert 75 percent of their debt into equity they can go ahead and fail. Then, on Christmas Eve, before we learn the results of that d-for-e swap, the Fed says, never mind, you can be a bank. We’ll just use our “emergency” (as opposed to superhero) powers to bend our own rules. And still GMAC doesn’t reveal the success or failure of the swap, claiming they needed time to tabulate the results. And now… we know. Surprise! Not. The Wall Street Journal reports “Struggling finance firm GMAC LLC said Wednesday that bondholders tendered $21.2 billion in notes in its bid to raise capital for its new status as a bank-holding company. The lender’s goal had been to raise $30 billion by converting 75% of its issued debt into preferred stock holdings. The offer expired Friday after having been extended four times.” So they received prior approval AND a $6b federal (that’s your taxes) investment and they STILL missed the legally mandated target by $8.8b. One rule for you, one for former U.S. Treasury Secretary and current Cerberus Chairman John Snow.
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Now I know that many, including me, (maybe esp. me) have been maligning the loss of America in all this. But this story brought to my mind the Golden Rule. And for those who may be misinformed as to what the Golden Rule is, basically, he who has the gold makes the rules. It makes me wonder. Is it really any different now than it has been, and my feeble little mind is just now catching up? Or is all this just recent application of the rule?
Hey, where is my "Landcrusher called it" headline?
Landcrusher : Due to popular demand, TTAC no longer gloats.
Bah! More people should take stock of their prognostication records. It would do us all good.