GM’s Finance Arm to Get Bank Privileges
Federal regulators will permit the financing arm of General Motors to become a bank and gain access to billions of dollars in government aid, a crucial step that will help ensure the survival of the company.
In a 4 to 1 vote, the Federal Reserve Board approved GMAC’s application to transform itself into a bank holding company “in light of the unusual and exigent circumstances” affecting the financial markets. The move will allow GMAC to tap as much as $6 billion in government bailout money. The approval came as GMAC bondholders were facing a Friday deadline to vote to approve a complex transaction that would significantly reduce the company’s outstanding debt.
Merry Christmas to all. Is that John in the new retro Camaro? 🙂
Does this mean I don’t have to pay my mortgage to them this month?
Fail Headline.
Sorry – Bad Headline as GM sold off almost all of it’s holdings in GMAC well over two years ago. GMAC is and has always been a complete “stand-alone” business separate from GM from its beginnings – But that doesn’t make a good “Bash The Auto Industry Story” does it…
Holy crap!
So GM, a failing company who was unable to run itself properly will suddenly be able to if they start calling themselves a bank, fail in that arena too and then qualify for billions stolen off the American taxpayer?
Amazing, simply amazing.
If you do some googling, this whole deal stinks. Check out who owns GMAC: 51% is owned by Cerberus Capital Management LP, who just HAPPENS to own 80.1% of Chrysler! Cerberus is a $24 billion company who refuses to lend Chrysler or GMAC money, preferring to let the taxpayer protect Cerebrus’ investments.
Never heard of Cerebrus? Well, the CEO is John W. Snow, former Treasury Secretary under Pres. George W. Bush and predecessor to Sec. Henry Paulson. Oh, and the chief spokesman for Cerebrus is former VP Dan Quayle, VP under Former President George H.W. Bush.
Congress refused to bail out the Big 3, but Pres. Bush saw fit to protect his buddies and use our money to do it.
Don’t just believe me, check the facts for yourself and be amazed at why NONE of the news media seems to care about this corruption.
Banks and credit unions require substantial down payments, 10%, plus much higher rates that GMAC and Ford Credit. Both are offering 0% 60 months loans and in many cases $7500 in rebates. The only way to clear the inventory is to lose money. This gives them a way to do that. If you need a car, it’s a buyers market. We’ll see many brands disappear, but the core of GM and Ford will remain.
I believe that GM sold GMAC to the same guys who own Chrysler. So this would be really going to a private equity firm
The only punishments I can think of that would fit this crime are cruel and unusal and thus against the constitution.
GMAC is going public. Some terms include both Cerebus and General Motors reducing their shares from 51% and 49% respectively to 14.9 and 10%. No shareholder may control more than 5% of the voting shares. Cerebus and GM may not share executives with GMAC. Bond holders may exchange their bonds for preferred shares.
These new changes will allow GMAC to borrow money from the Federal Reserve but also require more oversight and regulations. The Board will be vastly revamped to include a more diverse group of people.
Generally, this is a good thing.
I guess that’s one way to make the auto bailout legit. Still, under what authority is this money being given, when Congress voted no, and the first bailout was for the financial system?
Now they can get some of that unaccountable $ stash of Billions and not have to do anything to fix their business.