GMAC posts
FeedPosted Jan 2nd 2009 10:40AM by Zac Bissonnette (RSS feed)
Filed under: General Motors (GM)

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.
Posted Dec 30th 2008 5:45PM by Zac Bissonnette (RSS feed)
Filed under: General Motors (GM)

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.
Posted Dec 27th 2008 6:58AM by Douglas McIntyre (RSS feed)
Filed under: Competitive strategy, Goldman Sachs Group (GS)
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.
Posted Dec 26th 2008 9:30AM by Jim Cramer (RSS feed)
Filed under: Ford Motor (F), General Motors (GM), United Parcel'B' (UPS), YRC Worldwide (YRCW)

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.
Continue reading Cramer on BloggingStocks: The good news from emergency gas taxes
Posted Dec 26th 2008 8:10AM by Jonathan Berr (RSS feed)
Filed under: Before the bell, Consumer experience, General Motors (GM), Economic data

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."
Posted Oct 29th 2008 1:05PM by Melly Alazraki (RSS feed)
Filed under: General Motors (GM), Recession, Financial Crisis
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.
Continue reading General Motors: Global sales fall, new products postponed - can it be saved?
Posted Oct 16th 2008 11:08AM by Douglas McIntyre (RSS feed)
Filed under: Industry, General Motors (GM), Recession
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.
Continue reading GMAC cuts GM's throat, time for more federal aid?
Posted Oct 11th 2008 12:10PM by Zac Bissonnette (RSS feed)
Filed under: Deals, General Motors (GM)
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.
Posted Jul 14th 2008 3:51PM by Tom Taulli (RSS feed)
Filed under: Private equity

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.
Posted Apr 29th 2008 10:55AM by Brian White (RSS feed)
Filed under: Industry, Ford Motor (F), General Motors (GM)

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.
Posted Feb 25th 2008 9:00AM by Jim Cramer (RSS feed)
Filed under: General Motors (GM), Market matters, Goldman Sachs Group (GS), , Cramer on BloggingStocks
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.
Continue reading Cramer on BloggingStocks: Whence the negativity?
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