• May 14, 2010
If General Motors CEO Ed Whitacre has a personal soundtrack, perhaps it's anything by the group Attack! Attack! While the world waits for news of GM's first real profits, the company head is staking out a potentially huge acquisition, that being the auto financing arm of Ally Bank, which was once GMAC.

Ever since GM had to walk away from GMAC, dealers have had to rely on outside lenders in order to sell cars. One dealer said, "Getting a customer financed today is the hardest thing, even if they have good numbers," but a GM-owned finance arm could be more proactive with lending, and therefore moving metal and making money.

The report indicates that if Whitacre were looking to acquire Ally, he might only want to deal with the auto finance arm, leaving the other lending branches alone. Still, he'd have to sort out Ally's status as a bank holding company, and that might be too much to swallow. He could also form a partnership with other banks in the meantime, but it will take time to get banks on GM's side in the way GM wants, and Whitacre isn't a man out to waste time; he wants a deal in place by the end of the year before taking the company public.

[Source: Automotive News – Sub. Req'd | Image: William Thomas Cain/Getty Images]


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  • 13 Comments
      • 4 Years Ago
      Okay kids, here's the actual truth about GMAC when GM owned it: It was really profitable. Probably their most profitable division. They sold most of it to Cerberus to raise a bunch of money, and then Cerberus let GMAC get in on the subprime mortgage market. GMAC had done mortgages previously, but not subprime. GMAC's problems stem from Cerberus's business decisions.

      Even so, GMAC's auto finance arm is reporting strong profits right now. What is sinking GMAC is it's mortgage business, which Cerberus screwed up. It's not surprising at all that GM wants it's auto financing division back, because it was a huge cash cow, and it let them sell more cars.
      • 4 Years Ago
      It would be supremely stupid NOT to. GMAC was GM's cash cow and best source of income.

      REmember...the purpose of GM is to make money, not necessarily cars. Everything else is secondary.
        • 4 Years Ago
        its not a scam, get real. Did you read the article? GM wants nothing to do with the mortgage finance arm of GMAC only auto loans. This is what GM's been missing, they have a hard time with leases, and when in the dealers good luck getting a loan. They also cant compete with 0% they simply cant offer it. They need this to stay competitive. I hope they DO NOT prop up a bank, man I hope they dont just use GMAC
        • 4 Years Ago
        I think the govt will prevent GM from re-purchasing GMAC outright. But, for GM to just acquire the auto lending group of GMAC would make a lot of sense --- as long as the new GM lending division only writes/underwrites auto loans and MAYBE large-scale commercial real estate loans. GM, I'm pretty sure, has learn its lesson on playing with residential mortgage underwriting.
        • 4 Years Ago
        GMAC was not a cash cow. It lost enormous amounts of money. You think it was a cash cow because they underwrote crap mortgages for years, earning the fee income. When the mortgages went bust, the government bailed GMAC out, taking all the losses. So now that the taxpayers have taken all the losses, GM wants a do-over in the finance business. This is a complete scam.
        • 4 Years Ago
        I think overall this was a pretty big cash cow for GM. Don't forget they had already pawned off most of GMAC before things went south. It was at the time considered the one asset they had that was worth selling.

        Not having a captive finance arm is a major disadvantage for GM. Having a competitor in charge of your finance arm was a disaster. Hopefully they fix this problem.
      • 4 Years Ago
      What! The US Treasury Department wasn't good enough?
      • 4 Years Ago
      Bringing a finance arm back in-house makes sense.
      • 4 Years Ago
      I had no problem financing my mazda right here in Orangeville Canada
        • 4 Years Ago
        And that is relevant to GM, in the US, how...?
      • 4 Years Ago
      Why wouldn't they do it again? The American people will be forced to bail them out again when they lose money, but don't do anything to make it better. They should have been out of business. If you don't make money you close!!!!!
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