Comments on: Moral Hazard Continued at GMAC

By: Link

Link — Fri, 30 Oct 2009 09:35:36 +0000

Just like there’s no connection between the Fannie/Freddie and the Fed.

By: Tim

Tim — Fri, 30 Oct 2009 01:21:03 +0000

One correction. General Motors (the New GM) doesn’t own GMAC; and neither does Motors Liquidation (old GM). GM spun GMAC off in 2003; and it was eventually acquired by Cerberus — before they bought Chrysler. It’s automotive finance arm acted as GM’s and Chrysler’s for a while; but GM actually pushed customers away from GMAC financing near the end there….

But, ultimately; there’s no connection between Ally (nee GMAC), and any of the car companies.

By: epobirs

epobirs — Thu, 29 Oct 2009 09:06:34 +0000

If the goal at GM were to sell cars, that would almost make sense. And it might even be acceptable if it meant we were getting good cars and supports for them.

No, the goal here is to launder vast sums of borrowed taxpayers dollars for the enrichment of union bosses and their crony organizations.

By: happyjuggler0

happyjuggler0 — Wed, 28 Oct 2009 23:34:09 +0000

It is not surprising that GM can’t borrow what it needs/wants in the private sector. Obama stole from the bondholders and gave to the unions.

Fool me once, shame on you. Fool me twice, shame on me.

By: MJ

MJ — Wed, 28 Oct 2009 20:54:15 +0000

Ugh…the taxpayers get another expensive lessons in the importance of ignoring sunk costs.

By: Link

Link — Wed, 28 Oct 2009 20:51:32 +0000

We enacted the Bank Holding Company Act to separate banking from commerce. We did this to prevent the formation of big monoliths that funded their industrial businesses out of their bank businesses. We did so with the example of the Japanese zaibatsus specifically in mind — companies like Mitsubishi and Sumitomo.

Financial companies like GE Capital and GMAC were “non-bank banks” for BHCA purposes because they didn’t take deposits. They relied instead on commercial paper, other public debt offerings and securitization for their funding. Having to raise funds in the public markets without an FDIC deposit guaranty was an important discipline.

Now that GMAC has been magically allowed to be a bank holding company — and to fund itself with FDIC insured deposits — the UAW and Obama have their very own zaibatsu. It’s good to be king.

By: Eric

Eric — Wed, 28 Oct 2009 19:23:52 +0000

And, fortunately for the Obama administration, there are enough productive, taxpaying citizens left to pay for these ridiculous bailout schemes.

By: Captain Obviousness

Captain Obviousness — Wed, 28 Oct 2009 18:33:41 +0000

Another irritating thing about GMAC is that their government backing allows their new bank Ally (the one with the commercials where they taunt children) to offer CD’s that yield above-market rates because they are trying to raise deposits as much as possible. Prudent, non-government-backed or bailed out, regional banks or credit unions that offer market rates on their CD’s lose the deposits to Ally through no fault of their own.