Linda Beale announced her return to blogging after the death of her husband here. (Dan here…Welcome back to blogging Linda.)
by Linda Beale
The result of taxpayers’ financial bailout of GMAC
GMAC, as most of you likely know, was General Motors’ financial group. GMAC had originated as a means for the auto company to support the market for autos through its wholly owned lending group. But as with most corporate enterprises, it outgrew its origin, reaching near-collapse after becoming heavily involved in the residential mortgage securitization business and subprime loans. It was transferred to a hedge fund in 2006, and ultimately required rescue by the government’s bailout program in the 2008 financial crisis. Why was GMAC bailed out when other mortgage lenders were not? The government wanted to save the auto lending business, so “auto czar” Steven Rattner says, the rescue of GMAC was necessary in that “the governmant had to act quickly and there wasn’t enough time to untangle GMAC’s mortgage unit from the auto lending business.” U.S. Taxpayers Earn Profit on Ally, as Treasury Cuts Stake, Wall St. J., Oct. 21, 2014 at C4.
GM, of course, ultimately established a new financial arm related to its auto business, and that company has acquired some of the GMAC’s successor’s businesses around the globe. See, e.g., GM Financial to Benefit from Wall Street Upgrade, Sept 24, 2014.