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There Is More Than One Way To Get A Guv’ment Subsidy: GMAC Becomes A Bank
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General Motors Acceptance Corporation, GMAC, is now a bank.
On Wednesday, December 24, 2008 The New York Times published a report stating Federal regulators have approved the section of General Motors that handles financing, for cars and for homes, to become a bank in order to access billions of dollars of government subsidies, an action believed by the Fed Res to be a crucial step to insure the company’s survival.The Federal Reserve approved, by a vote of 4 to 1, GMAC’s application to transform itself into a bank holding company “in light of the unusual and exigent circumstances” affecting the financial markets. The Federal Reserve approval will allow GMAC to receive as much as $6 billion of government bailout money. The approval came as GMAC bondholders were facing a Friday, December 26, 2008, deadline to vote to approve a complex transaction that would significantly reduce the company’s outstanding debt.
GMAC has been hit with huge losses in both its mortgage and auto loan businesses.
Didn’t we tell you just a short while ago to organize your friends and become a bank to get some of that free guv’ment money? Seems somebody out there was paying attention to our advice.
Now what’s next? Could AT&T, and Verizon become bank holding companies in order to get a piece of the federal bailout rock? Stay tuned!
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