GMAC now part of the bank bailout
Since GMAC was allowed to become a stand-alone bank, the Bush administration has included it in the bank bailout. Steve Henn explains how the finance arm of General Motors started expanding service beyond car loans.
A sign for GMAC Mortgage Corporate Headquarters in Horsham, Pa. (William Thomas Cain/Getty Images)
More on Auto Industry, America's Financial Crisis
TEXT OF STORY
Scott Jagow: A company that got into the mortgage business at the wrong time was GMAC. It's a car financing company. And until last night, it was about dead in the water. But you, the taxpayer, stepped in with another bailout. The government is taking a $5 billion stake in GMAC. And it's coming out of the money for banks, since GMAC was allowed to become a bank. Marketplace's Steve Henn has more.
Steve Henn: GMAC has been scrambling for weeks to get a piece of the bailout pie. GM's finance arm was in tough shape. During the housing boom, it branched out from its core business making car loans and became one of the most aggressive home lenders in America.
Keith Crain: After that happened, home lending self-destructed.
Keith Crain publishes Automotive News. He says the housing crisis left GMAC too strapped to make many car loans, and that's crushed GM's sales. With this cash infusion, GMAC's books suddenly look a lot better. But Crain's not optimistic that'll mean more sales for GM.
Crain: GMAC is going to want to make money. They are not going to want to subsidize the sales of General Motors.
When GMAC was founded decades ago, its entire purpose was to help move cars off the lot. But now as a stand-alone bank, it has to answer to its own shareholders and keep banking regulators happy.
In Washington, I'm Steve Henn for Marketplace.
Comments
Comment | Refresh
From Washington, DC, 12/30/2008
A Specific Application of Employment, Interest and Money
Plea for an Adventure in a New World Economic Order
Adam Smith, Karl Marx, John Maynard Keynes and Alan Greenspan: a Unified Perspective
Abstract:
This tract makes a critical analysis of credit based, free market economy, Capitalism, and proves that its dysfunctions are the result of the existence of credit.
It shows that income / wealth disparity, cause and consequence of credit, is the first order hidden variable, possibly the only one, of economic development.
It solves most of the puzzles of macro economy: among which Business Cycles, Stagflation, Greenspan Conundrum and Keynes' Liquidity Trap...
It shows that Adam Smith, John Maynard Keynes, Karl Marx and Alan Greenspan don't contradict each other but that they each bring a meaningful contribution to a same framework for understanding macro economy.
It proposes a credit free, free market economy as a solution that would correct all of those dysfunctions.
In This Age of Turbulence People Want an Exit Strategy out of Credit, an Adventure in a New World Economic Order.
Read It.
From Washington, DC, 12/30/2008
A Specific Application of Employment, Interest and Money
Plea for an Adventure in a New World Economic Order
Adam Smith, Karl Marx, John Maynard Keynes and Alan Greenspan: a Unified Perspective
Abstract:
This tract makes a critical analysis of credit based, free market economy, Capitalism, and proves that its dysfunctions are the result of the existence of credit.
It shows that income / wealth disparity, cause and consequence of credit, is the first order hidden variable, possibly the only one, of economic development.
It solves most of the puzzles of macro economy: among which Business Cycles, Stagflation, Greenspan Conundrum and Keynes' Liquidity Trap...
It shows that Adam Smith, John Maynard Keynes, Karl Marx and Alan Greenspan don't contradict each other but that they each bring a meaningful contribution to a same framework for understanding macro economy.
It proposes a credit free, free market economy as a solution that would correct all of those dysfunctions.
In This Age of Turbulence People Want an Exit Strategy out of Credit, an Adventure in a New World Economic Order.
Read It.
Post a Comment: Please be civil, brief and relevant.
Email addresses are never displayed, but they are required to confirm your comments. All comments are moderated. Marketplace reserves the right to edit any comments on this site and to read them on the air if they are extra-interesting. Please read the Comment Guidelines before posting.
You must be 13 or over to submit information to American Public Media. The information entered into this form will not be used to send unsolicited email and will not be sold to a third party. For more information see Terms and Conditions and Privacy Policy.