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GMAC may receive second bailout

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posted on May, 21 2009 @ 06:31 AM

GMAC may receive second bailout

DETROIT (Reuters) -- The Treasury Department is preparing to announce as early as Wednesday that it will invest an additional $7.5 billion in lender GMAC LLC in a deal that could allow the U.S. government to hold a majority stake in the Detroit-based auto finance company, the Detroit News reported.

GMAC, which also provides loans for consumers to buy General Motors Corp. (GM, Fortune 500) and Chrysler LLC vehicles, has been in talks for several weeks to secure additional capital.....
(visit the link for the full news article)

posted on May, 21 2009 @ 06:31 AM
When is enough going to be enough. This bailout business has become the new business standard. All though I know that GM and GMAC are technically two different companies, They are in fact tied to each other.

My main point would be that if the finance company needs bailed out, then the prime company that makes the product that the finance company finances is obviously not selling its product. So I believe that this goes to prove the fact that GM is failing and will fail in the near future. In return GM will take GMAC down with it.

The bailout, as stated by so many of us, will not cure the problem. In all actuallity the trickle down of all of these business failures has barely started to hit main street. Once the full brunt of the financial downturn hits, these companies will become even more insolvent.

Why are we insisting on failing? Everyone needs to be asking this.
(visit the link for the full news article)

posted on May, 21 2009 @ 06:37 AM
All these bailouts remind me so much of a drug addict, withdrawal starts to hit so the solution is take another hit rather than wait it out and get better. We are at a point now where it is getting out of hand, the bailouts won't stop until the money is gone and at that point the house of cards will just come crashing down. The good news is after it finally does we can start to recover, right now we are just delaying the inevitable.

posted on May, 21 2009 @ 08:03 AM
Promises, promises.

This is about the protection from the free market promised to those vested interests who supported the careerist political industry.

The money will NEVER stop flowing from Congress and the Senate to ALL institutions which are contributory to the revenue stream of the elite. Notice, that aside from the GMAC label, this is not really to bolster the automobile industry, but instead to prop up their lending (banking) limited liability corporation.

It's another bank bailout in reality. But because they share the GMAC label, they can claim it's for the auto industry.

posted on May, 21 2009 @ 08:12 AM
I'm no more a fan of bailouts than anyone else, but I do stand behind the automakers on this one. Not just because Michigan is already hurting so badly. But because it's a domestic industry that which employs so many hard-working Americans. Considering the astronomical unemployment and job losses their failure would create, not to mention the shock waves that would cripple or even hobble countless other job fields, I, personally, could not begrudge them the funds to stay afloat.

In an era when America is well-known for being a consumer-not a productive- country, it seems like an insult not to help one of the producing factions we have left.

posted on May, 21 2009 @ 08:42 AM
GMAC until Chryslers recent Bankruptcy was also partnered with Chrysler's lending unit. The merger of the entities hurt them both during the economic down turn.

GMAC also suffers from over exposure to mortgages having become a recent home lender in recent years.

GMAC is also burdened by a record and staggering amount of automobile loan defaults.

In normal times GMAC like other banks would simply reposses the vehicles sell them at a local auction at a slight loss and recoup their money and capital.

There defaults are averaging not 100% greater than normal but over 100 times greater than normal.

Not only is it logistically almost impossible to 'snatch' and reposses all those cars but if you could, for instance if you run 10 Chevy Malibus through a local wholesale auction on any given day they will all hold close to wholesale NADA black book value, if you had to run 100 Chevy Malibus through a single auction on any given day they would bring thousands belowe wholesale NADA black book value because there are so many of them available...if you ran 1,000 Chevy Malibus through the local wholesale auction on any given day it would totally not only destroy their wholesale value bringing in just a fraction of their wholesale price, but every GM Franchise that was stockign pre-owned Chevy Malibus that they had bought and financed on their GMAC lines of Credit would plummet right along with them, giving those dealers no chance of ever getting the money back out of what they invested in the car as a trade-in or a wholesale purchase for their used car business.

Toyota is posting a 10.2 billion dollar loss in the first quarter this year and is forecasting it's vehicle sales will be off by 1,000,000 units this year!

Americans who don't shop, buy or drive domestic cars think this is about mismanagement.

Try telling that to's not about gross mismanagement it's 90% of all car consumers finance all or a major portion of the purchase and the banks simply are still not lending money after 2 trillion in bailouts auto and home loans are still almost impossible to recieve for people with perfect credit scores and good jobs.

I urge my fellow Americans to not let poorly formed preconceptions based on a market you likely have little frequent first hand interaction with create knee jerk reactions that is only going to further hurt the 1 in 7 Americans directly and indirectly employed by the car business, not to mention the huge charity grants and donations car dealers make in their local communities in liue of tradditional advertising.

It's not just car dealers and their employees and union workers who are going to continue suffering as a result of the frozen credit markets but shippers, advertisors, youth sporting, civic orginizations and church groups that the lack of retail auto sales prevents dealers from being able to financially support.

The big gamble in giving the big three money is will they use that money to set up more manufacturing aimed at capturing share of the huge exploding Chinese Car Market that bought more cars last year than America did.

Our love of cheap Chinese manufactured goods and Wal-Mart has created a rival market that the big corporations many of them America see as a far more lucrative and growth oriented one than America since they do now have all our manufacturing and a real sustainable wage base and disposable income to buy products we no longer do.

Americans really need to start thinking for a change instead of simply reacting and allowing themselves to be misled and herded. That's what got all of us into this mess not just the big 3. If you still aren't prepared to acknowledge how each and every one of us has played a roll and is responsible for how we earn and spend our money and where and want to make this just the government's fault, and just the corporations fault, and not intelligently realize how you and I and everyone else has done some pretty stupid things in how and where we spent out money that has in effect slit our own throats and doomed our own economy then well...we really are screwed because if we can't get it together and figure it out, chances are the government and the corporations are going to figure out as usual what's in their best interest and not ours!

posted on May, 21 2009 @ 12:48 PM
reply to post by orderedchaos

So you are for giving large sums of money out just to see if it might work? It hasn't worked yet with so many companies so why would it work for GMAC?

posted on Jun, 1 2009 @ 02:11 PM
No, I am not "for" giving large or small sums of money to anyone. I also do not support the welfare state, which the country as a whole is quickly becoming- everyone holding a hand out, looking for a hand out.

I was under the impression that the funds going to the car manufacturers were loans, not hand outs. And was also under a further impression the funds dished out in the article was the second tier of loans given as per prior conditions that GM had to cut corners, cut costs, and meet certain requirements in order to receive the large sum.

all i can find offhand, as I don't have the patience currently to sift through archives was a line copied from the article in the post.

"GMAC, the former financing arm of General Motors, has taken $5 billion from the government already. In addition, the Treasury has lent GM $884 million to support GMAC's lending activities."

Do i support it? No. I don't support a great many decisions made in this country. But I can't in conscience ignore the certainty that if thousands of people could be unemployed practically overnight with something being done, and even more thousands going hungry as a result.

in a damned if you do, damned if you don't situation, which is the greater and lesser evil?

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