Fed grants GMAC authority to seek bailout funds

[DJ13]

Source: AP

Martin Crutsinger, Ap Economics Writer – 6 mins ago


WASHINGTON – General Motors' chances of survival improved Wednesday after its financing arm became eligible to tap into federal bailout funds.

The Federal Reserve approved GMAC Financial Services' request to become a bank holding company, allowing it to apply for a portion of the $700 billion bailout fund and get emergency loans directly from the Fed.

Analysts had speculated that without financial help, GMAC would have had to file for bankruptcy protection or shut down, dealing a serious blow to GM's own chances for survival. The Fed cited "emergency conditions" in justifying its decision.

The move to rescue an auto financing company was just the latest extension of the federal bailout program, which has designed to shore up ailing banks but has grown to include insurers and credit card companies.

Read more: http://news.yahoo.com/s/ap/20081224/ap_on_bi_ge/fed_gmac

[Festivito]

1. So GM gets a double bailout for playing Bush's game?

We could have ignored the entire auto company show had this happened before.

[Robbien]

8. Hedge funder Cerberus gets a double bite at the bailout pie

Since Cerberus loaded down GMAC with billions of dollars of debt when it "bought" 51% of GMAC last year, of course GMAC is in trouble.

Cerberus also loaded down Chrysler will billions of dollars of debt when it "bought" 80% of Chrysler last year. Chrysler too became troubled unable to service the debt.


Cerberus is very lucky though, not only did it get to profit from the takeover transactions last year, now it gets to attach itself to the bailout monies, twice. Once through Chrysler and going back again through GMAC.

[Festivito]

9. How ReSmuglican to suckle at the public teat twice.

Your money all IS ours!

Thanks.

[Cassandra]

2. I hope they get to keep paying shareholders...

since I own some and need the money to pay my increasingly exorbitant health insurance premiums.

[whathappened]

3. gmac morage

this same old gmac just sold my loan to another morgage company , i think they have sold almost all there home loans to other companys , is this loan for the car loans if so it is good , if it is for more home loans they don't need the money to try again to be in the home loan buiness

[pipoman]

5. It must be for mortgages

they have likely only sold their upper tier home loans and are left with the poorer risk loans, and defaulted loans.

[MichiganVote]

4. Well, look at the bright side. We know GMAC w/advance credit, unlike the hoarding banks ....

[pipoman]

6. GMAC

I was a GMAC auto loan contractor for around 20 years. I could see the writing on the wall long before the housing bubble burst. 2 years ago they completely revamped their collection department and contracted with a nationwide collection/repossession agency. Knowing the ins and outs of repossession, I am fairly confident that wasn't the best move for them. While their per/unit repossession costs may have been reduced, I suspect their legal fees and write offs increased dramatically. As of 2 years ago they had posted 3 or 4 years of losses. I was never sure how they were organized, if the home loan division, credit card division and the auto loan division were seperate of under the same umbrella.

[Veritas_et_Aequitas]

7. It's my fault.

I withdrew what few funds I had from my account with them. I guess it set them over the edge. :p