We've decided to stop trying to guess what General Motors will do before its IPO – which might come next month or later this year or early next year. What we do know is that GM has wanted to secure a captive finance arm before an IPO, a process that looked unlikely, then fell off the radar entirely, and then, BAM!, GM whips out $3.5 billion to buy AmeriCredit. That has made at least one senator do a double-take, asking whether spending that much money and loaning to the subprime market is the best thing for the Detroit automaker to do.

Republican Charles Grassley is quoted by Bloomberg as saying, "If GM has $3.5 billion in cash to buy a financial institution, it seems like it should have paid back taxpayers first," adding that The General should remain "clear of repeating its effort to make high-risk car loans." He has written a letter to the inspector general of the TARP program seeking an inquiry into the purchase.

Grassley has little hope of scuttling the purchase, however. As long as GM stands by the terms of the bailout, it can do just about anything it wants, which includes buying a bank. The move is also explained, of course, as a way to bolster GM's bottom line, something everyone wants. Company CFO Chris Lidell notes that if GM can add just one more percent to the number of buyers – people with credit scores between 500 and 650 – that's a "significant" benefit, as well as the additional leasing it can offer. And that one additional percent of subprime purchasers would still leave it in-line with the industry average.

[Source: Bloomberg]