Truemors
is reporting from
Member
NP Rank:
NP Rank:
GMAC Declared a Bank: GM Gets Funding Through a Bailout Backdoor
Share:
by Tina Kells | December 24, 2008 at 06:08 pm
295 views | 2 Recommendations | 4 comments
The drama surrounding the auto industry bailout appears to have been all for show as the US Federal Reserve let GM use a backdoor technicality to access Bailout Bill funds. The US Federal Reserve played Santa Claus as it granted GMAC, the in-house financing branch of General Motors, status as a bank holding company.
Now that GMAC, the General Motors Acceptance Corporation, is a bank it will be called GMAC Financial Services and will be able to offer a wide variety of services, like mortgages and unsecured loans. So just days after getting part of a special $17.4 billion auto industry specific bailout GM has found a way to access the $700 billion banking bailout package.
GMAC LLC won Federal Reserve approval to become a bank holding company, enabling the auto lender to tap U.S. financial industry bailout programs and help keep General Motors Corp. in business.The Fed is using emergency powers to grant Detroit-based GMAC’s request because of the “unusual and exigent circumstances affecting the financial markets,” according to a statement from the central bank today. To comply with rules about who can own a bank, GMAC’s majority owner Cerberus Capital Management LP agreed to distribute its stake to its investors and minority owner GM will cede all control.
The Fed order said the plan “would benefit the public by strengthening GMAC’s ability to fund the purchases of vehicles manufactured by GM.”
Saving GMAC may improve the chances of salvaging GM, which received $9.4 billion in U.S. loans this month to stave off collapse at least until January. The package didn’t include support for GMAC, which finances about 75 percent of the inventory at GM dealers. The lender also served as a major source of loans to GM car buyers until it was frozen out of credit markets after losses totaling $7.9 billion.
What is NowPublic?
NowPublic lets people work together to cover news events around the world.
Most RecentMost Recommended Comments (4)
at 21:41 on December 24th, 2008
We seriously need to get on with becoming energy independent. Utilizing alternative energy sources would not only lessen our dependence on foreign oil it would create cheap, clean energy, as well as create millions of badly needed new green collar jobs. This past year the high cost of fuel seriously damaged our economy and society. It destroyed every imaginable budget from national to state to the local school. While some are foolish enough to be doing the happy dance around the lower prices at the pumps they are totally missing out on the news that OPEC is planning to cut production and raise the price per barrel back up to between 75-100 bucks again. I just read Jeff Wilson's new book The Manhattan Project of 2009 Energy Independence Now. you can see it @ www.themanhattanprojectof2009.com It would cost the equivalent of 60 cents per gallon to charge and drive an electric vehicle. The electricity to charge the vehicle could come partially or totally from electricity generated by wind or solar. One of the most fascinating facts in the book is that ...If all gasoline cars, trucks, and suv’s instead had plug-in electric drive trains, the amount of electricity needed to replace gasoline is about equal to the estimated wind energy potential of the state of North Dakota. Why don't we use some of the billions in bail out money to bail us out of our dependence on foreign oil? We must move forward as nation towards energy independence. Oil is finite, it will run out one day in the not too distant future. We need to use some of these bail out bucks to bail us out of our dependence on foreign oil.
at 16:25 on December 26th, 2008
"estimated wind energy potential"
That is the key phrase
at 15:47 on January 9th, 2009
As a taxpayer, what will be your initial reaction when you hear that General Motors that it is in danger of running out of cash in the first half of next year? Of course, you will be shocked at first.
at 00:22 on January 15th, 2009
So General Motors is going to be getting money from both the financial and auto bailout? I suppose my GM credit card rewards will be worth something now.