Deadline passes without word on critical GMAC bond-exchange vote
GMAC, General Motors' finance arm, was granted bank holding status, but there is still no word on whether the bond buyback was successful. The deadline for GMAC to have converted enough of its bonds - said to be 75 percent - into $28 billion in liquidity was on Friday, December 26, at 11:59 p.m. In return for bondholders converting their bonds to those of lesser value, they would receive a higher dividend. Two weeks ago, GMAC said it found a slew of new bondholders, but didn't say whether the new participants would put it above the threshold. Now more than two days past the deadline, GMAC has only said "We have not yet issued final results but intend to in the near term." This kind of silence usually means that things didn't go as planned, but other plans are afoot. While it's not impossible, we'd be shocked if GM had fulfilled The Fed's requirements by the deadline and chose to remain quiet about it.
After all, success for GMAC means success for GM. But bankruptcy for GMAC - which could happen without access to TARP funds - could mean something very close to doom for a lot of dealers and for GM. Our guess is that GMAC and The Fed are trying to figure out the best way forward, because it is certain that the government doesn't want to see its $17.4 billion dollar investment go bust because GM lost on a side bet less than a month later.
[Source: New York Times]
Reader Comments (Page 1 of 1)
BigMcLargeHuge 1:59PM (12/29/2008)
What is the REAL cost of an auto bailout?
Are we going to start bailing out each and every supplier next? They will be suffering as well due to decreased demand for cars, regardless of who's been bailed out so far.
Reply
Sea Urchin 2:30PM (12/29/2008)
Have no fear, bailout man is here.
http://thelink.concordia.ca/media/images/i_2008-02-12/22fe.pigman.jpg
Todd 2:02PM (12/29/2008)
Giant song and dance, part of the "used car salesman bullsh*t artist" culture, to get everyone to think they've changed their ways.
This is proof that the March deadline will arrive and GM will have absolutely nothing to show they shouldn't be allowed to go into bankruptcy.
Reply
Judy Zik 2:33PM (12/29/2008)
Let's not forget that GMAC is owned by Cerberus. That dog has a lot of high placed friends. Like the big banks they will get whatever bailout money they want hand delivered tomorrow without a question. There is no way they will be allowed to fail. GM and it's car buisness are really just a small part of GMAC. It is more about bailing out a company that holds a large number of mortgages and is owned by rich folks who want to stay rich.
Reply
Steve_S 2:42PM (12/29/2008)
Die already, file chapt 11 and restructure, Its what they will have to do in 3 months anyway.
Reply