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.
….speaking of “ending up in prison.”
I realize that one of the many hats a CEO wears is that of head cheerleader and encourager-extraordinaire. Got it.
But at what point do endlessly optimistic comments (e.g., No C11. Not now. Not ever. Not even on the table for discussion!) in the face of what appears to be solid and growing financial evidence to the contrary, constitute criminal acts?
In other words, are there any experts on the site that have a feel for what Wagoner has to do to “cross the line”? Does he have to get caught shorting his own stock?
To quote Jim Carey in “Liar Liar”
“Hit me again Ike! And put some STANK on it!!!”
GMAC doesn’t have to eliminate floorplan to tank the weak dealers they can continue to do what they have done to many GM dealers I know in the San Francisco metro area and that is require large paydowns of 2007 and old age 2008 models. A 40 year chevy dealer I know just threw in the towel after recieving a letter requireing a 800 thousand plus check due november first to pay down old age units. This was the last straw for this store.
“But at what point do endlessly optimistic comments (e.g., No C11. Not now. Not ever. Not even on the table for discussion!) in the face of what appears to be solid and growing financial evidence to the contrary, constitute criminal acts?”
Ask Bernie Ebbers!
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.
Prose like that keeps me coming back to TTAC. Lack of such reporting is why I rarely read newspapers anymore.
Well, it does not matter what Wagoner done. I believe that there are plenty execs who crossed the proverbial line. FBI already stated that there are no plans to prosecute anyone due to high cost and low probability of conviction. In addition, they simply don’t have resource to do that.
It cost less and brings more glamor to chase obese, aged Italian dons for breaking toes of gambling degenerates, then ridding financial and corporate system from billion dollar felons.
autonut :
November 10th, 2008 at 3:55 pm
Well, it does not matter what Wagoner done. I believe that there are plenty execs who crossed the proverbial line. FBI already stated that there are no plans to prosecute anyone due to high cost and low probability of conviction. In addition, they simply don’t have resource to do that.
It cost less and brings more glamor to chase obese, aged Italian dons for breaking toes of gambling degenerates, then ridding financial and corporate system from billion dollar felons.
Reduce that to a bumper sticker and you’ll sell millions.