Francisco Franco is Still Dead. GMAC? No Se Nada.
GMAC. Bank or bust? We still don’t know. As we’ve reported at least twice previously, if the troubled lender failed to make the leap to hyper-suckle by Friday at 11:59 pm (i.e. get investors to swap out enough debt for equity to morph into a bank and scarf $6.3b or so from the Trouble Asset Relief Program, and a bunch more as federally secured debt), then the whole house of cards known as the domestic auto industry will come crashing down. Automotive News [sub] reports that GM spinmeister Gina Proia said the company expects to put out the results of the debt-for-equity swap in “the near term.” Let’s call that option C. Option A? GMAC did the deed but remained tight-lipped for the last two days because majority owners Cerberus never met a cloak of invisibility they didn’t wrap around their operation like Christo covering the Arc de Triomphe. After all, this is the same privately-held company that owns Chrysler, which expects Uncle Sugar to “lend” it $4b, despite the fact that we don’t know how Cerberus paid for it in the first place and/or who owns the paper on what now, after the sale and (presumably) deep borrowing against assets. And now, option B…
The GMAC debt-for-equity swap didn’t succeed, and the players have spent the weekend conspiring to end run the laws set-up by Congress to protect the sanctity of the American banking system on the voters’ behalf.
This seems the most likely scenario. Especially if you savor this little News McNugget: “The bank holding company approval was not contingent on the bond exchange,” Proia told Reuters. “But the debt swap was contingent on GMAC getting the bank holding company approval.” Huh? As far as I know, even though the Fed said, yup, sure, you can do that, GMAC still had to satisfy U.S. banking law. In other words, the Fed had pre-approved the transformation contingent on the swap.
We’ll keep you posted on the end, or the end run.
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Hopefully, it gets mostly postponed until after Wednesday, when maybe some more honest folks are brought in. (-wait, I'm already laughing at that one! :) :) :) ) *Guaranteed though, 'The Man Behind The Curtain' (Stephen A. Feinberg) at Cerberus is and has been calling in all the Kickbacks, and probably signing all the Swap Me/Do You Markers he can possibly lay his hands on. +++Oof! -I just remembered, GMAC got into the Home Mortgage Business just in time to write a bunch of bad Sub-Prime tickets, too. http://www.nytimes.com/2008/12/06/business/06chrysler.html?_r=1 http://www.forbes.com/2008/12/09/chrysler-cerberus-bailout-oped-cx_dg_1210gerstein.html http://www.businessweek.com/magazine/content/07_42/b4054043.htm?campaign_id=rss_as http://www.businessweek.com/magazine/content/07_52/b4064028904522_page_2.htm http://www.businessweek.com/magazine/content/05_40/b3953110.htm
I don't consider the silence as good, I consider it as ominous. They would have been happy to loudly trumpet an apparent success / victory (ie, free money given freely to reward their failure / defeat). They are probably under a cone of silence. The silence was imposed upon them because the terms are so onerous to the American public; so generous to GMAC and the dog with three suckling mouths, that the powers told them to keep the terms on the qt until they can quietly release them under the cover of some other major attention-getting news story, such as some confusing event occuring somewhere in some other country.