By all the laws of free market capitalism, this piece of shit should have entered bankruptcy and been chopped into pieces. They make JC Penney and Sears look like well run entities. There is no legitimate reason why the American taxpayer needed to save this horrible company that thrived upon the ignorance of the poor, lack of regulatory oversight by the Federal Reserve and the easy money policies of Bernanke and Greenspan. There are 8,000 banks in the United States. They can all make car loans. But the majority of these banks will only make car loans to borrowers who can pay them back. Barack Obama and his minions saved GMAC in order to fuel their Keynesian master plan to revive our economy. With Obama still owning 85% of this parasitic corporation, he has been able to peddle billions of car loans to subprime deadbeats in an attempt to convince the ignorant masses that the economy is recovering. The losses won’t hit for another year or two and will be buried in the $1 trillion annual deficit numbers. David Stockman takes on Wall Street and K Street in his awesome new book. I highly recommend it to anyone who can handle the truth. Plus, it is so big and heavy you’ll be able to use it as a weapon when the subprime zombie hoard tries to attack your homestead.
“GMAC was not only a huge purveyor of some of the worst slime in the subprime auto loan and home mortgage market, but it was also a giant financial train wreck waiting to happen. Leveraged at more than 10 to 1 and funded with massive amounts of short-term commercial paper, it had no ability to absorb even mild losses in its loan book.
GMAC was in the business of accumulating truly rotten loans. Its operating units appear to have scoured subprime America looking for “twofers”. Thus, the notorious Ditech online mortgage operation put millions of financially strapped households in homes they couldn’t afford. Then it compounded the favor by putting a new car in their garage via a six-year subprime auto loan that was “upside down” i.e., greater than the value of the car) nearly from day one.
Many of the “twofer” households lured into unsustainable debt by GMAC’s subprime predators defaulted on their auto and mortgage loans when housing prices crashed and the economy buckled. As a consequence, GMAC ended up writing down $25 billion of loans, or more than the cumulative profits it had booked during the previous several years.
By every rule of capitalism, an enterprise as foolish, dangerous, predatory, and insolvent as GMAC should have been completely liquidated by a financial meltdown which was functioning to purge exactly that kind of deformation. Instead, has remained on federal life support owing to $16 billion in TARP funding and an additional $30 billion in guarantees and subventions from FDIC and the Fed.”
David Stockman – The Great Deformation – The Corruption of Capitalism in America