REPORT: GMAC likely to get more cash soon from federal government
GMAC has received $12.5 billion in U.S. Treasury loans since last December, but that sizable amount of cash may not be the last of government assistance. The Detroit News is reporting that General Motors' finance arm could receive between $4 billion to $5.6 billion by November 9 in order to satisfy more stringent government mandates to have sufficient cash on hand in the event of a prolonged recession. GM's financing arm said in May that it was attempting to obtain the additional cash by means other than the federal government, but private financing never came.Back in May, the government loaned GMAC (which has been converted to be a bank holding company in order to be eligible for TARP loans) $7.5 billion while also taking a 35% stake in the company and appointing two directors. The new loans will likely mean that Uncle Sam will take a larger stake in the company.
On the surface the loans look like another huge helping hand for GM, but the situation is quite a bit more complicated than that. $4 billion of those dollars were loaned to GMAC to assume some of the loans given by Chrysler Financial, which will cease to exist by 2011. GMAC has taken over primary vehicle lending for Chrysler dealers as part of the Pentastar's bankruptcy. GM also sold 51% of GMAC to Cerberus Capital Management back in 2006, so the General hasn't even been a majority owner of its finance company for well over three years.
[Source: The Detroit News]
Reader Comments (Page 1 of 2)
Lar7789789 10:32AM (10/28/2009)
oh come on another loan for GM? This is why they just really suck as a company, and why most people don't want to buy their cars, and why they will be going bankrupt a second time.
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Danimal 10:42AM (10/28/2009)
"...the General hasn't even been a majority owner of its finance company for well over three years."
You can be against Government loans all you want, but to call GMAC GM's company is not exactly accurate.
ebleyes 10:44AM (10/28/2009)
Reading the article before commenting prevent you from looking like an idiot.
mortonb11 11:27AM (10/28/2009)
read the article ... GM only owns a portion of GMAC. GMAC is its own company, and supplies financing to multiple sources.
Luis 11:56AM (10/28/2009)
The problem is GMAC=GM in the minds of consumers (unfortunately Americans=consumers now). Therefore any bad news at GMAC translates to bad news for GM. Perhaps GMAC needs a new name...
Sea Urchin 12:13PM (10/28/2009)
Who cares about GMAC, i for one just opened an account with Ally Bank, they are great, the rates are amazing and i can guarantee you they are not begging Government for a bailout. They are rock solid. Go Ally.
Invisible 12:28PM (10/28/2009)
No LUIS, GMAC needs to die and go away!
Nathan 10:46AM (10/28/2009)
God damn. Just let the empire collapse already so we can start rebuilding it. The government is doing nothing but delaying the inevitable with the continued bailouts and the longer the wait the longer the fall is going to be.
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Gary 11:22AM (10/28/2009)
GM and the government are just following the example of the ignorant general populace. That is, for years and years, people have thought nothing of getting deeper and deeper into debt to maintain the status quo and their standard of living. You were just laid off your manufacturing job, but you want a new big screen TV? Just put everything on a credit card! Credit cards maxed out? Get a home equity loan!
Keep piling it on, but something's gotta give...
Gary 3:13PM (10/28/2009)
No rebuttals?
Glock23 10:50AM (10/28/2009)
Whoo Hooo! More corporate welfare on the taxpayers dime!
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dukeisduke 10:51AM (10/28/2009)
Spinning off GMAC was one of the worst ideas to come out of GM. For awhile there, GMAC's profits were keeping GM afloat. And when the credit crunch came, GM dealers couldn't get financing out of GMAC.
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C.W. 10:55AM (10/28/2009)
unreal
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skablaw 10:56AM (10/28/2009)
We'll never get out from under this landslide. The cars being touted as GM's salvation will be lucky to carry them one year into their model lives. The LaCrosse had promise on paper, but everything I've read about real-world experiences make it sound very underwhelming. The Camaro is good at what it does, but that design, much though I love it today, is going to age so poorly that it will be the mid-90's 5.0 Mustang of modern muscle cars. It's going to seem so anachronistic in two years that you'll snicker when one drives by. And what else do we have to look forward to? The Volt? Give me a break.
There is one place and one place only that GM can ever hope to compete on and it's price. They'll have to come up with products that undercut the competition in every segment and hope that people stay broke enough to send some business their way. I think it's hillarious that the accusations against GM throughout the last decade have always been, "they don't make cars anyone wants," yet the very vehicles the political hacks pointed to were the only GM products I'd ever consider touching: Tahoe, Suburban, Silverado (ditto the GMC versions) and Corvette.
Nobody drives an Aveo, or a Cobalt or an Impala because they want to. They drive them because they either didn't have the option or didn't care enough to drive something else. That's not an enviable product positioning situation. Good automakers with desirable products are struggling in this economy - how can GM possibly hope to compete? Of course Obama would sacrifice Sasha and Malia on an alter to the Gods of populism before allowing this beached whale to draw its last breath on his watch so we'll have to be content to watch him and his cronies funnel the hopes and dreams we've worked so hard to one day pay for into life support for his Pyrrhic victory.
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Danimal 11:26AM (10/28/2009)
Let's see...
Camaro, Volt, GMC, Aveo, Obama, and even a little virgin sacrifice in there.
Yup, that's right folks, we have a GM hater Grand Slam!! Round of applause for the contestant!
skablaw 12:20PM (10/28/2009)
Danimal,
I know it's convenient and mindlessly simple to challenge statements like mine with trite comments accusing one of being a GM hater and therefore somehow unqualified to take umbrage with what clearly has been and is becoming ever more so a fiscal and policy disaster, one which we have our current Commander in Chief, and his rather obtuse response to matters of serious national and global implications, to thank for.
I would urge you, however, to remove yourself from the insular box of the lock-step mindset you have resigned yourself to, and consider the very real possibility that this company does not now, and will not any time soon, produce mainstream passenger cars that posses much in the way of redeeming virtues beyond their highly-incentivized price points.
There are only two outcomes for GM and neither of them are to surpass the world's leaders in producing quality automobiles. One, they will be an interminable drain on national resources and the incomes of hard working American citizens, or two, they will limp along another five or ten years until perhaps we will have some leaders in office with the backbone to say, "enough is enough." I would hope that respect for your fellow countrymen would outweigh some jingoistic sense of blind support for a broken, anachronistic emblem of a bygone America, but selfish pride and peoples' aversion to admitting when they are clearly wrong are difficult mental barriers to breach.
As for GMAC, they remain inextricably linked to the larger morass in the same way that McDonald's cannot help but be influenced by the condition of the beef or potato market. Part of GM proper or not, they are, indeed, part of the problem.
Danimal 12:39PM (10/28/2009)
No, continuing your rants will not win you the bonus round.
daleam 6:44PM (10/28/2009)
This comment has absolutely NOTHING to do with the post.
Greg Aryous 11:16AM (10/28/2009)
Just remember the next time you see a 0% ad from Gov't Motors or Crisisler, that its more of your hard-earned tax dollars going down the drain!
Also, if you ever see a TV commercial for the "fine print" ad by ALLY BANK, its really GMAC hiding behind the covers...
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montoym 11:35AM (10/28/2009)
FWIW, Ditech is GMAC as well. So are a bunch of other companies. GMAC isn't "hiding" anything, just doing the same as a number of other corporations. Point being?