Wednesday, August 20, 2014
Inquirer Daily News

GMAC owes US $17 billion from "baffling" bailout: report

"It is unclear whether the US taxpayer will recoup the investments"

GMAC owes US $17 billion from "baffling" bailout: report

GMAC Financial Services, the Michigan-based auto lender which locally employs around 2,000 home loan (ResCap) and corporte staff at its Fort Washington offices, "seems to have been treated more favorably than other companies" that got federal bailouts in 2008-09, reports the Congressional Oversight Panel that's watchdogging Targeted Asset Relief Program (TARP) bailouts. 

Summary here  and full report here  see especially Conclusions and Recommendations on pp 117-121. Excerpts:

"It is unclear whether the US taxpayer will recoup the investments made in GMAC. The total amount at stake in GMAC itself is $17.2 billion... The [Office of Management and Budget] currently estimates a loss of at lesast $6.3 billion of that amount."

Seeing GMAC as a bank, "the decision to rescue GMAC is one of the more baffling decisions made under the TARP. A company that apparently posed no systemic risk to the financial system, that did not seem too big to fail, too interconnected to fail, or indeed of any systemic significance, was assisted to the extent of a total of $17.2 billion of taxpayers' money and became one of the five largest wards of the state," alongside GM, Citi, etc.

But, considered as part of the automakers' crisis, the GMAC rescue was "an intrinsic part... of the rescue of GM and Chrysler... Within that context, Treasury's objectives become clearer." The panel wouldn't comment on whether the auto rescue was a good idea; that's above its pay grade, apparently.

Joseph N. DiStefano
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Joseph N. DiStefano
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