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GMAC is Giving Away Your Money

December 31, 2008 11:15 am

GMAC, the main source of auto loans for General Motors (GM), was recently approved as a bank holding company allowing them to access funds from the Federal government. Within days after the approval, taxpayers provided the lender with $6 billion of funds through the TARP in an effort to help stimulate auto sales. That could be helpful as during November sales were down a whopping 37%. What’s more, as record layoffs persist, vehicle sales are not seeing any chance of returning to normal levels anytime soon.

You would think that the record number of auto loan defaults and delinquencies seen during 2008 that GMAC would look to a conservative approach when lending this money in a time of great economic distress. But, NOOOOOOOOOO. Instead they believe they have to relax lending standards and provide ridiculously low interest rates that they will assuredly have them lose on every deal. Here is how they are about to spend your money…

Read the full story HERE

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Written by Andrew Horowitz · Category(s) Economy, Markets, Stocks    |  Tags: • •   

4 Responses to “GMAC is Giving Away Your Money”

  1. saeed on January 1st, 2009 2:40 pm

    Wait a second here. I thought then "loan" was supposed to go towards fixing the company itself, and not encouraging the loan company into handing out loans to people who are a BIGGER credit risk, especially in these tough times. Is there a plan to even try to fix the problem at the source, and try to make cars that people will WANT to buy, make new deals with the unions, and try to make their cars more fuel efficient?

    Or was the solution the whole time to just get people to spend, without even really giving a %*$# about the true source of the problem?

  2. Jerry Sprin ger on January 2nd, 2009 9:23 am

    You have the GM loan confused with the GMAC issue. GMAC needs to originate loans on GM vehicles to create sales and cash flow for GM so that they can execute a turnaround plan. Furthermore, the loans being made are to higher quality consumers than at any time in the recent past. As far as building cars people want, there are a lot of large american people that can't or don't want to ride in some mini car. If I want to save on gas, I'll just drive a little less.

  3. Jonathan Lawson on January 4th, 2009 8:30 am

    The kicker on this is that it really bails out Cerberus Capital Mgmt. 40% owners of GMAC. Absolutely disgusting. GM and Chrysler need to be liquidated and start over. Let capitalism work. Their assets will be bought, modified, and put back to work. Not to mention oversees subsidiaries of GM will continue to be profitable.

  4. Andrew Horowitz on January 4th, 2009 11:26 pm

    Re: saeed commented on GMAC is Giving Away Your Money – Saeed. There are two ways to look at this whole thing. If you want to be positive, you ould say that the money is being used to help revive sales blah blah. BUT, I agree, no one said ZERO interest and lower FICO scores.. Andrew

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