GMAC gets closer to becoming a commercial bank – yawn

December 15, 2008 by · Leave a Comment
Filed under: Industry News 

When did it become critical that people can buy a new car every year?  I am just astonished that we are letting a car financing unit become a bank just so they can get access to our taxpayer funds.  Mainstreet has been left in the cold and all we seem to care about is all the fat cats that did not make prudent choices to retain money for the bad times that always come.  What direction are we trying to go, backwards or forwards?

News:

GMAC LLC investors holding about $10.5 billion of bonds agreed to sweetened terms of a debt swap, bringing the auto and home lender closer to its goal of becoming a bank and getting a federal bailout.

“The committee has unanimously agreed to support the offer,” said Andrew Rosenberg, partner at Weiss, Rifkind, Wharton & Garrison LLP, in an interview today from his New York office. Rosenberg represents the bondholders, who had balked at the Detroit-based company’s proposed $38 billion debt exchange. The offer was designed to help avert a collapse and pave the way for GMAC to convert to a bank holding company.

The switch could give GMAC access to the Treasury’s $700 billion rescue fund and allow it to sell bonds backed by the government. If the exchange isn’t completed by the end of the year, GMAC said in filing last month there is a “significant risk” it will default on its debt. A bankruptcy by GMAC, the primary lender to General Motors Corp. dealers, may put up to 40 percent of GM’s U.S. dealerships out of business, Martin NeSmith, a member of GM’s National Dealer Council, said last week.     

Source: Bloomberg

 

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