The Wall Street Journal reports (subscription required) that GMAC Financial Services Inc. (NYSE: GKM) is seeking a third round of bailout funds from the Treasury Department ranging from $2.8 billion to $5.6 billion. This is, the WSJ writes, "a stark reminder of how some battered financial firms remain dependent on government lifelines."

Here's what is so incredibly so screwd up about this: GMAC provides financing for car buyers. Any personal finance expert will tell you that borrowing money to buy a car is one of the dumbest things that you can possibly do.

The five most senior General Motors (NYSE: GRM) executives, along with the 20 next highest-paid employees, are going to see their cash compensation fall $3.9 million (31%) on a year-over-year basis.

The decision was made by the "independent master" that was appointed to set pay and stock levels for those in charge of companies that have received a majority of the funding from the federal government. GM is not on its own, as top execs at GMAC (the company's financing arm) and Chrysler will see their compensation cut as well.

With GMAC Financial Services (NYSE: GKM) having been run into the ground to the point where it required an emergency $6 billion bailout from the federal government, you'd think the chairman of the company's board of directors would have been toast a long time ago. But he's still there: billions of dollars in irresponsible loans apparently aren't enough to get you fired.

Change my be on the way. The bailout makes the federal government the largest shareholder in the company, and according to BusinessWeek, "That means there will be a clean sweep that will likely push out J. Ezra Merkin, along with most of the executives who were appointed to the board by owners General Motors (NYSE: GM) and Cerberus Capital Management, say sources involved with the changeover. Day-to-day management, however, may stay in place."

GMAC's board will be reduced from 12 members to 7 and chairman Merkin is "unlikely" to remain.

Wow. Merkin has presided over a reckless spree of bad loans that culminated in the need for a federal bailout, and, by the way, is being sued by New York University for allegedly concealing Bernard Madoff's fraudulent practices when he funneled NYU money into his investments scheme.

In corporate America, that's apparently only enough to make you unlikely to remain in power. Until that changes, we're probably doomed.

With the Treasury Department's $6 billion gift to General Motor's (NYSE: GM) financing arm GMAC, the company will live to fight another day.

So what are they going to do? In a statement, the company announced that it would lower the minimum credit score required for financing from 700 to 621.

Am I missing something? Aren't lax lending standards a huge part of what got us into this little contretemps in the first place? President Bill Muir said that "The actions of the federal government to support GMAC are having an immediate and meaningful effect on our ability to provide credit to automotive customers. We will continue to employ responsible credit standards, but will be able to relax the constraints we put in place a few months ago due to the credit crisis."

I really can't help but question the wisdom of making car loans easier to come by. Every personal finance expert on the face of the earth -- from Suze Orman to Dave Ramsey -- will tell you that taking out a car loan to buy a new car is one of the stupidest things you can do. There are plenty of used cars available in the United States, and the long-term financial well-being of consumers would be improved if they had no choice but to forgo new cars in favor of used ones.

I know: We have to save the auto industry. But the need for a bailout of the industry provides compelling evidence that it's not worth saving.

It is a bit odd that when both consumer confidence and housing prices hit levels of virtual collapse the market does little other than move up.

The Conference Board said that its consumer confidence index dropped to 38, an all-time low. The Case-Shiller price index published today by Standard & Poor's showed that housing values in major metro areas dropped 18% in October compared to the same month last year.

The only plausible explanation for the market's indifference is the idea that all the bad news is already priced into equities. If so, trading may turn ugly early next year when stockholders find out this bad news is only the beginning.

U.S. stock market futures gained at the start of the last trading week of the year. The rally may be short-lived given that many traders have taken the week between Christmas and New Year's off. Stock markets in Europe and Asia advanced as well.

Oil prices are rising amidst growing worries about the clash between Israel and Hamas in the Gaza Strip. In early trading today, oil topped $40 as the death toll in the clash reached 300. Whether the conflict will boost prices at the pump remains to be seen. Members of OPEC are expected to cut production further to boost prices, which are down more than 70 percent since July. Prices may fall further as the economic slowdown further erodes demand.

Meanwhile, faith in the global economy was further undermined by the decision Sunday of Kuwait's government to cancel a $17.4 billion joint venture with Dow Chemical Co. (NYSE: DOW). Shares of the Michigan-based company and Rohm & Haas Co. (NYSE: ROH), which Dow agreed to buy earlier this year for $15.4 billion, fell in pre-market action.

GMAC has given no word about whether bondholders approved a debt exchange program that would give the financing arm of General Motors Co. (NYSE: GM) with access to the $700 billion financial bailout program for financial institutions.

GMAC finally got its wish. It has been designated a bank under federal rules, the same rules that transformed Goldman Sachs (NYSE: GS) from being an investment house to being a commercial banking operation.

Now, like the other companies with the new designation, it can go, hat in hand, and beseech the Treasury to give it money. According to Reuters, "analysts estimated GMAC might be seeking loans of more than $6 billion." The government could also be asked to back new debt issues from the firm.

GMAC is in both the car loan and mortgage businesses. It may be a stretch to figure how it gets in under the commercial bank rule set up by the Fed. But, there is a more disturbing angle to the story. GMAC is majority owned by Cerberus, just as Chrysler is. The bailing out of Detroit is beginning to look like a bailing out of Cerberus, which by most estimates has over $25 billion under management.

Maybe tax payers should get a controlling ownership of the hedge fund that they are keeping afloat.

Douglas A. McIntyre is an editor at 247wallst.com.

With gasoline prices plummeting, I see that every major state has enacted some form of an emergency gas tax to help fill the diminishing coffers and patch up gaping holes in budgets. It may be one of those rare bits of good news stemming from the radical deflation of commodities. I am surprised that California doesn't have one, and I figure that New Jersey, one of the states with horrible finances (perhaps among the worst, although not rivaling California or Michigan), will put one in place shortly.

I think we continually underestimate the impact of still lower gasoline prices on a host of industries. Ford (NYSE: F) (Cramer's Take) could get a windfall because it still has a big line of heavy duty gas guzzlers that are immensely popular. General Motors (NYSE: GM) (Cramer's Take) is a hard call because of its ownership structure, although I am sure it will pop with the GMAC deal. I'd sell it.

If United Parcel Service (NYSE:UPS) (Cramer's Take) had any traffic, it has a huge fuel surcharge that it can slowly diminish to help the margins. YRC Worldwide (NASDAQ: YRCW) (Cramer's Take) had a great one, but I think that company is now a goner. Obviously, I have already discussed the retail benefit, but it looks like that didn't matter much.

Stock markets are poised to open higher as investors -- those that are not taking a holiday break -- reacted favorably to news that the government will allow GMAC LLC to become a bank holding company, giving the finance arm of General Motors Corp. (NYSE:GM) the opportunity to qualify for the government's $700 billion rescue fund.

That news will be tempered by data indicating the holiday shopping season was godawful. Retail sales fell between 5.5 percent and 8 percent compared with last year, according to SpendingPulse. Without auto or gas sales, the decline is between 2 percent and 4 percent, according to the Associated Press. Sales plunged as much as 25 percent in November alone.

Retailers are hoping to lure customers into their stores today with early-morning bargains. Whether that brings the companies some late Christmas cheer remains to be seen. With rising unemployment and falling home prices, many people skipped the holiday season entirely because they could not afford it. Many who could afford presents probably were not feeling very merry.

Other factors that may move the market include oil prices. Prices rose above $36 as investors bet that members of OPEC would stick to their production cuts even as demand continues to fall amdist the economic slowdown. The gain may short-lived.

"All the economic figures are pointing to demand destruction, and that's not going to change soon," said Christoffer Moltke-Leth, head of sales trading for Saxo Capital Markets in Singapore, in an interview with the AP. "There seems to be no end to the bad news from economic data."

General Motors Corp. (NYSE: GM) shares continue their upward move from Tuesday, up 2.7% in early morning trading, after it reported global sales numbers and the fact that GMAC will get federal help to access the locked-down commercial credit markets.

You may think the global sales figures were encouraging, but GM actually reported an 11.4% decline in global sales in the third quarter. This was expected as an economic slowdown hit not only the U.S. but Western Europe as well, halting the trend that saw overseas growth keeping GM's total vehicle sales on the rise. GM's sales in those regions dropped by 19% and 12% respectively. And if GM had any hopes that other regions would compensate, the 3.4% increase in sales in Latin America, Africa and Middle East and the 2.6% increase in sales Asia Pacific weren't a match for the big drops in GM's main markets.

Meanwhile, GMAC, the financial arm part-owned by GM and which further strained the troubled automaker once the credit crisis hit, was granted access to new short-term funding facility created by the Federal Reserve. Now it wants to become a bank holding company as it tries to gain even more access to more sources of capital that may help it escape the current cash squeeze it finds itself in.

GMAC, the former lending arm of General Motors Corp. (NYSE: GM) has hedge fund Cerberus as its largest owner. GM still has a piece. Now, the financial firm has begun to undermine the fortunes of the car company that created it to give car loans to its customers.

According to The Wall Street Journal (subscription required), "GMAC LLC, the big home and auto financing company, this week began restricting new loans to the most credit-worthy buyers after an attempt to raise new funds failed. The move threatens to crimp General Motors Corp.'s U.S. sales, forcing the struggling auto maker to push its potential buyers to other lenders." Those "other lenders" are mostly banks, who do not want to give car purchasers any money either.

GMAC's problems are, to a large extent, because of its mortgage lending operation, but that hardly matters to GM, which is losing $1 billion a month on its North American operations. GM's unit sales are running off 20% or better compared with last year.

The Wall Street Journal reports (subscription required) that General Motors (NYSE: GM) was recently in discussions to acquire Chrysler from Cerberus Capital Management, the private equity firm in the unpleasant position of owning that train wreck.

Once you learn the details, it's not quite as dumb as it sounds at first. According to the Journal, "Cerberus proposed a swap in which GM would acquire Chrysler's automotive operations, and in turn give Cerberus its remaining 49% stake in GMAC."

Given what a mess GMAC is, the proposal provides an idea of what Cerberus thinks of Chrysler's long-term prospects. It's a little bit like a few college students trying to trade 98 Degrees CDs for Dawson's Creek posters.

It's pretty much moot because the events of the past week have made a deal of this size impossible to put together, at least for now. But it's still interesting to think about. Given what a dump GM is, it's hard to imagine that an acquisition of this size and complexity would help matters. CEO Richard Wagoner (seen at right mulling the merger) already has his hands full.

GM insists that bankruptcy is not on the table. But so does every company -- until it files.

In the midst of an ailing US economy in the early 1990s, Cerberus Capital Management, L.P. got its start. And yes, the firm found many undervalued opportunities – and made a bundle. Actually, today Cerberus has holdings with aggregate annual revenues in excess of $100 billion.

So, in the current environment, Cerberus should be doing fine, right? Not necessarily. According to a story in Bloomberg.com, Cerberus's latest fund – called Series Four -- is down 1% since November 2006.

And it makes sense. If anything, Cerberus has been early in a variety investments. It also looks like the firm has diverged somewhat from its core-value approach.

Oh, and of course, Cerberus invested in iffy deals like Chrysler LLC and GMAC LLC.

True, Cerberus does take a disciplined approach to portfolio allocation – with no more than 5% of a fund in a particular deal.

However, such amounts can still be material – especially in a low-return environment. After all, there is still little clarity in the auto and mortgage markets right now.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

When General Motors Corp. (NYSE: GM) reports quarterly earnings tomorrow, the Detroit automaker is expected to post a steep loss in profit due to sales of SUVs and large trucks dropping off a cliff. Gas prices have increased sharply and have caught GM off-guard as its margin-heavy SUV segment has been hit hard. The automaker has not shifted its product mix fast enough to compensate.

Curiously though, investor Kirk Kerkorian planted more seeds in the auto industry yesterday by increasing his stake in rival Ford Motor Co. (NYSE: F), upping his ownership of the company to 5.7% after Ford reported a surprising $100 million profit late last week. Kerkorian invested in GM a few years ago, but dumped his shares after GM rebuffed efforts to become a partner with France's Renault SA. Why would Kerkorian re-enter the auto market after years of turbulence and the highest gas prices in a generation, even with Ford's recent profit?

Kerkorian may like what he sees in Ford CEO Alan Mulally. Mulally has said that Ford is re-sizing its capacity output to fit market conditions in terms of demand. This includes production capacity as well as product mix, which is the flexible golden ticket any automaker needs in a world of constantly changing variables. GM just hasn't gotten there, and it's hard to see if it will. GM lost $39 billion, although that amount was mostly due to tax changes not bad decision making. Will Kerkorian have success with Ford as his renewed interest in the auto sector picks back up? Ford will need it, as one quarter doesn't make a turnaround.

TheStreet.com's Jim Cramer says until we have some failures, he doesn't share the pervasive gloomy outlook.

Where are all the bank failures? When is a Freescale (NYSE: FSL) (Cramer's Take) or an Outback going to go under? How can Cerberus put on such a happy face? Why don't some newspaper or radio station companies fail?

As I read the article on Goldman Sachs (NYSE: GS) (Cramer's Take) today, I am struck by its sheer negativity. The Journal article makes it sound like Goldman is sitting on a pile of huge losses, paper that's never going to sell.

But I have to remind these naysayers that this is corporate debt, and corporate debt -- unlike so much of the housing debt of 2005-2007 -- is actually based on something, some standards, that actually might get it through.