Why does GMAC need more money?
GMAC, the auto finance arm of General Motors, is set to collect billions in government aid. Why does it need more money and is this unfair to other automakers? Tamara Keith reports.
A car pulls into a Buick dealership in DeKalb, Ill. The dealership is set to have its business relationship discontinued with GM. (Jeff Haynes/Getty Images)
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Kai Ryssdal: And I realize what I'm asking is easier said than done, closing your ears to straight economic numbers at a time like this. But it really can help. I mean, how much good would it do you to know that first time claims for unemployment benefits were down a bit last week? Or that an index called, leading economic indicators, rose just about as much in April as everybody was guessing. Not so much good, right?
So let's concentrate instead today on the zeitgeist, the economic environment we're in. Of bailouts and government support for ostensibly private companies. We learned today that GMAC is in line to get another $7 billion from the Treasury Department. GMAC is GM's auto-financing company and, since its bankruptcy, Chrysler's too. The money would help GMAC make loans to consumers and so help GM and Chrysler -- but not Ford -- move cars off their lots. From Washington, Tamara Keith reports.
TAMARA KEITH: GMAC is critical to both GM and now Chrysler after its finance arm was dissolved in bankruptcy. GMAC financing helps dealers stock their lots and helps consumers buy cars. Bill Visnick is a senior editor at Edmunds Auto Observer.
BILL VISNICK: Car dealers need GMAC to be able to extend that financing to the customers who are coming in to the dealerships because nobody can afford to turn away a customer, a live prospect in the dealership right now.
The stress tests showed GMAC was in big trouble. Federal regulators said GMAC needed to raise $11.5 billion in capital and admitted it would probably need government help.
MARYANNE KELLER: Frankly the balance sheet of this finance company is a wreck.
Maryanne Keller is an independent automotive analyst.
KELLER: So I'm sure that this money is going to be used to help facilitate some great big end of model year blowout sale.
Complete with too-good-to-be-true auto finance deals. But imagine being the Ford dealer across the street. Keller says carmakers that haven't gotten government help could be at a real disadvantage.
KELLER: They have to fund their dealers, they have to fund their consumers. And they are going to be competing against two government-controlled entities where it seems that money in any amount is no object.
Money... no object. Hmmm. That's starting to sound familiar.
In Washington, I'm Tamara Keith for Marketplace.
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From Coconutcreek, FL, 07/07/2009
I own A Cadillac escalade financed by GMAC they gave me an extension in March and repo my vehicle in April. I made my online payment and the rejected it without telling me. when I recover the Vehicle they made me pay for 3 mouth worth of payment that I didn’t owe and my vehicle was damaged during the repo. When I call them on the phone they out source there call to India and the Philippines they would rather pay foreigners then Americans But they ask for our tax dollar to keep them going this is not right. America needs to know that GMAC has no loyalty to America. I am General Contractor
And when the building industry took a dive I had to close my Business this is unfortunate but that is the world of free enterprise. What make them better than us? .
From Detroit, MI, 06/16/2009
GM says they are selling Saab, but looks like they are giving it away along with lots of taxpayers money. STUPID keeps on going. Bankrupt GM is giving away assets, buying bankrupt Delphi with our money, and still have not built a single car in the last two months. Fake bankrutcy, illagal, and we are lossing billions, when will this stop. Please stop this give away bailout mess, as it is just ’smoke and mirror. ripe off of honest america.
From livermore, CA, 05/21/2009
why do we keep doing this! out of the last 15 billion they used 80% to buy back lobby in washington. do we need to make our politician richer!
Beside in the last 30 yrs has there been one year which GM did not produce a lemon!
they purchase the air cooled engine from porsche. made the infamous corvair! they made a good car (few yrs) saturn! It was to good so they messed it up to the point the company is now garbage. When are we going to learn! get rid of the whole top exec then start over.
From Menifee, CA, 05/21/2009
This leftist crap about giving other peoples' money(tax money) to these failed companies is pure crap. I couldn't care less about GMAC, a high interest junk financial company that took advantage of millions of stupid people for 50 years or more. Why should I have to support these losers?
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