GMAC Financial Services Inc. and the Treasury Department are in advanced talks to prop up the lender with its third helping of taxpayer money, people familiar with the matter said.
The U.S. government is likely to inject $2.8 billion to $5.6 billion of capital into the Detroit company, on top of the $12.5 billion that GMAC has received since December 2008, these people said.
For those of you keeping score at home, this would be the third time the federal government has bailed out GMAC. This comes on the heel of news that Congress is close to approving an extension of the $8,000 first time home buyer tax credit. Fund My Mutual Fund comments:
So instead of accepting the pain a “reset” would cause the economy, we’ve turned to a full Ponzi scheme both in housing and autos. … Here is how it works – many Americans cannot afford a car (house)… or at least a car (house) “they deserve”. [Some] banks are finally realizing they have to begin making loans (mortgages) where there is a good chance they get paid back … I know, very old school. … As we watch GMAC just replace that acronym with (pick your poison: FHA, Fannie, Freddie)… and you can parallel American policy for autos with homes. Of course the housing disaster we’re “rebuilding” is of much larger scale – but the same playbook. We borrow money we don’t have from the future or foreigners …. to subsidize interest rates. That allows Americans to afford cars in cool deals where little to nothing down is required and “rock bottom” interest rates are prevalent. Since few banks will do that stupid of a deal anymore we need a true idiot to show up. Lo and behold – the Bank of the US Taxpayer via GMAC is here. That’s where the taxpayer is used on the front end of the deal. But your work is not done sir/madam. On the back end of the deal, when many of these buyers can’t afford the car “they deserve” – they default on the loan, and lo and behold GMAC shows up (as they have for a third time) to collect from the Bank of the US Taxpayer.
The Obama administration has admitted the economy is no longer “in free fall.” Economic catastrophe was the only rational supporting both the $700 billion TARP and the $787 billion stimulus. Now that the economy has stabilized it is time to repeal TARP and repeal the stimulus.