The mainstream media is beginning to wake up to GMAC’s seemingly endless call on the public purse. Thanks to chronic mismanagement—and an 11th hour, last-minute back room deal with The Fed and the US Treasury that turned the virtually bankrupt lender into a bank that couldn’t pass a stress test if it was doped-up to the eyeballs with Thorazine—GM’s former cash cow has become a cow-sized vampire bat, feasting on US taxpayers’ blood, sweat and tears. It’s sucked-up $6 billion in federal funding so far, heading for another . . . wait for it . . . $15.5 billion. The Wall Street Journal is shedding a little heat (not light) on this “hidden” auto bailout, which is heading for another one of those dumb-ass “your money for government equity in a born loser” jobs. Without the slightest hint of accountability.
“Put it together and what have you got?” Dennis K. Berman asks, resisting the urge to use a suitable rhetorical flourish (i.e., call someone an asshole). “A bank potentially owned and regulated by the government. One that is embarking on an ambitious merger in a troubled industry, directed by a board in flux. Looming above are a Congress and White House that have expressed little public care for strategy or accountability.” And TTAC is there.
Oh, and you may remember that no less a personage than the president of these here United States promised a pre-stress test financial refresh for GMAC, to fund ChryCo’s customers and dealers. Apparently, nobody checked the deal with Chrysler Financial, the company responsible for same. Well guess what? The AP reports that they still haven’t cleared the deal with the bankrupt automaker’s in-house finance company. But GMAC has requested permission from bankruptcy judge Arthur Gonzalez to shove ChryFi aside.
Why do I get the feeling the phrases “above board” and “transparency” are losing all meaning?
@ RF
What I enjoy about your writing is your ability to express surprise……
GMAC is not the straw, but this whole mess of government intervention, threats, disregarding law, spending like there’s no tomorrow, pursuing the “green” initiative at any cost in dollars or jobs lost, rewarding of those who make mistakes and are too lazy/dumb to support themselves or do their homework and understand their finances is driving this country straight into the crapper. To top it off, we’ll probably be rewarded with further government control in the future, much higher taxes, and rampant inflation to pay for our spending.
I wish the government would just die. Pick up the trash, pave the roads, ya know all that basic service crap, and call it a day.
The government IS going to die, done in by deficit spending and compound interest. Look around and you will see governmental units dropping services due to decades of reckless spending and the inability to keep up with current and future obligations. Sound familiar ? That’s where GM learned it. :-)
Hey RF, Seems about time for you to begin a Government Death Watch series?? ;O)
I wish that someone (a lot smarter than me) with an independent mind would properly describe what would have happened to all of the banks and the auto industry if the gov’t had done nothing.
I think that the chaos would be extrordinary, like people running in the streets chaos. Maybe I’ve overstated this, I suppose, a collapse of one half of the country’s banks and industries is no WMD-level threat.
shaker:
if the banks would not have been bailed out then well over half of bank [assets] in the US would have gone become insolvent: think – Citi, Bank of America, AIG to start, plus many others.
Not a pretty sight to see.
As for BIG/little Auto, if they’d been allowed to fail, I imagine that things would look pretty much like they do now, with maybe 10-20% more job loss (over the past year – maybe 7 million instead of 5.7 or so).
The truth is that the big banks are much more important to western civilization than GM and ChryCo
‘Why do I get the feeling the phrases “above board” and “transparency” are losing all meaning?’
Don’t forget “Of course I will respect you in the morning.”
Well what else can our gov’t do? I mean, GMAC is just too big to fail.
The strangest part of the GMAC ‘loan’ deal is this: Why can’t they sell more assets? According to their website, they own $189B in assets, as of Dec. 31 2008.
http://www.gmacfs.com/
I cannot forecast the outcome of these shenanigans, because it is a riddle, wrapped in a mystery, inside an enigma. But I expect that along the way there will be toil as well as blood, tears and sweat. And it may come to be that if the American taxpayer’s dollar lasts for a thousand years, men will still say “this was its insanest hour.”