I think one thing that the government really needs to do is tell Cerebus.."If your going to use our bail out money for Chrysler, we want your half of GMAC in return". Then the government should take Cerebus's 51%..sell 2% to GM, give GMAC the bail out it needs, and then set a schedule at which GM has to repurchase it from the government.

Cerebus owning Chrysler & Chrysler Financial, plus GMAC (which it bought before Chrysler)...is a clear conflict of interest and should not be allowed to continue. It also would be a good way for the government to punish them for their part in the mess.

 

They wanted the automakers to fail. Only the president stepped in at the last min. and gave them the money from TARP.
You think the same reps would do this? No way in fact I bet Mr. Shelby is on the phone with Cerebus making sure they keep doing this.

 

There is no love lost between the government and the Big 3- They have been battling for decades- hearings that I can recall going back to the 60's. CAFE, crash standards, 5-MPH bumpers, on and on- the government is convinced that they are better at building cars than the industry is- so there is a clash of egos going back for decades- and, I suspect, that some in the congress think this is their chance to 'get those guys' rather than help preserve an important national asset-

 

To be blunt, the government NEEDED to step in in most cases!

In the 1960s, automobile manufacturers resisted putting seatbelts in cars because of they believed that seatbelts gave the perception cars were unsafe. Tucker put padded dashboards and safety glass in his cars back in the 1940s, yet it wasn't until the government mandated it that US
manufacturers got on board.

Gasoline contained lead and it came right out the tailpipe. Government mandates took out the lead (and since lead helped high compression engines, eradicated those engines for some time.

I remember the fuel shortages of the 1970s. It was caused by OPEC not liking our support of Isreal when the Arab world launched a coordinated attack against it, and with the help of US intellegence and weapons, Isreal kicked some serious butt and even gained territory in the process. The shear fact that countries could get together and bring the United States Of America to it's knees and throw it into a recession, got the government serious about imported oil. Since jacking up fuel taxes was a non starter, CAFE was the answer.

Of course there were some government regs that wer missteps. The 55 mph speed limit was silly. Interlocking seatbelts (only oldtimers remember those) were silly and in some instances dangerous. In the late 70s and early 80s the government had to twice suspend or postpone standards they imposed. But overall, to say that the government regulations on the auto industry has been universally bad is downright dumb.

Today we have family V6 powered cars that not only get the horsepower of some of the most powerful muscle cars of the 60s, we have V8s today that get better fuel economy than economy cars of the 1970s (Compare the V8 powered 2008 Crown Victoria's mileage to a base '74 Pinto's... you'll be stunned). The new Ford Focus puts out less pollution than a typical lawnmower. Cars today run so clean that the Hemlock Society removed breathing car exhausts from the ways to kill yourself years ago.

Given a choice between riding with my 5 year old girl in by 2002 Camaro and a bigger '68 Impala, I'd choose the Camaro. Improved braking standards, crush zones, rollover standards, rear end crash standards, side impact standards, and even airbags makes that car safer.

As far as emissions, I doubt you are old enough to remember what being around car fumes were like when there was still alot of pre-catalyst vehicles on the road. Often the biggest opposition to things comes frome either people stuck more on an idea than reality or people who simply weren't around before things changed.


But the biggest thing of all that is often forgotten by those who look at government as the blanket all purpose problem with the auto industry is that they forget that the auto industry is a business first. The idea that the poor old auto industry is always getting beat up by some outside force is naieve.

A business' purpose is to make money first. They make money by extending the least amount of expense to make the most amount of profit. Period. When you are dealing with large volume production, the amount of iron saved by making brakes a inch less in diameter, or the cost savings of even forgoing seat belts and padded dash adds up. Of course as would any business that had to face new regulations, the auto industry fought every new regulation. Every new regulation meant additional cost. And the standards applied to everyone, so if one company could do it, then everyone can.


Again, by no means am I saying the feds are always right. But as history has shown, bad legislation has a habit of weeding itself out. At the end of the day, it's all about jobs. Congress in the old days kept that in mind regarding the auto industry... unlike today's congress... or better yet, a few senators who have alot of intrest in seeing their import based factories succeed.

Who in 1974 would believe in the future there would be a 500 net horsepower, supercharged Shelby Mustang that gets roughly the same fuel economy as a 90 horsepower V6 Mustang II... and that whole 500 horse 8 cylinder engine puts out alot less pollution than just a single cylinder of that cat and air pumped choked 70s era Mustang.

Automakers wouldn't have gotten there on their own.

 

WASHINGTON (AP) -- The Treasury Department said Monday that it will provide $5 billion to GMAC Financial Services LLC, the ailing financing arm of General Motors Corp., from the $700 billion bank rescue program.

The government will receive preferred shares that pay an 8 percent dividend and warrants to purchase additional shares in return for the money, the department said.

Treasury also said it will lend up to $1 billion to General Motors so that the company can purchase additional equity that GMAC is planning to offer as part of its effort to raise more capital.

The assistance is part of a larger government effort to aid the auto industry and is on top of the $17.4 billion in loans the Bush administration agreed to provide to the industry Dec. 19, a Treasury Department official said.

Analysts had speculated that if GMAC didn't obtain financial help it would have to file for bankruptcy protection or shut down, which would be a serious blow to GM's own chances for survival.

Last week, the Federal Reserve approved GMAC's application to become a bank holding company, which made it eligible to receive money from the financial rescue fund. The Fed's approval was contingent on GMAC raising additional capital.

Separately, GMAC said late Monday that it has accepted all the bonds tendered in a debt-for-equity swap that was also part of its capital-raising efforts. The company released few details about the results of the swap.

GMAC "intends to act quickly to resume automotive lending to a broader spectrum of customers," the company said in a statement.

The company's goal is to reach $30 billion in capital, the majority of which would come from the debt-for-equity exchange. GMAC has struggled to get bondholders to convert 75 percent of their debt into equity of the company and has yet to say whether it has met its goal.

The Treasury Department's investment in the company does not mean it is "passing judgment" on whether GMAC has met the Fed's requirements to raise additional capital, the official said.

GMAC, meanwhile, said the government's $5 billion investment was completed Monday. The $1 billion loan is still in progress, the Treasury official said.

The Treasury Department said after initially bailing out the auto industry earlier this month that it had committed the first $350 billion of the bank bailout fund, and said Congress should release the second half.

But in several cases the Treasury hasn't actually spent all the committed funds, and the department will use money that hasn't yet been spent to fund the investment in GMAC, the official said. For example, the department allocated $250 billion for a program to inject capital into banks, but has so far spent only about $162 billion of that amount.

General Motors' partial ownership of GMAC has kept the finance arm lending to dealers and car buyers, even as credit from traditional banks has dried up. If GMAC went bankrupt, other institutions would be unlikely to step in to replace the credit lost by GM's dealers and customers.

GM owns 49 percent of GMAC, while the rest is owned by private equity firm Cerberus Capital Management.

As part of its order last week approving GMAC's application for bank-holding company status, the Federal Reserve said GM will reduce its stake to less than 10 percent of the voting and total equity interest of GMAC. Cerberus, which led an investment group that bought a 51 percent stake in GMAC from the automaker for $14 billion in 2006, will reduce its stake in GMAC to no more than 33 percent of total equity.

AP Auto Writer Bree Fowler in New York contributed to this report.

http://finance.yahoo.com/news/GMAC-r...-13931800.html

Also, per this article:
http://www.msnbc.msn.com/id/28419386/

GMAC will lax credit report scores to 621 for people looking to buy a car. I wonder what % increase that will lead to.

 

Cerberus. Cerberus. Cerberus.

Jebus...

 

GMAC, GM, Cerberus, Chrysler


all tied to the mast of a ship in a storm. It's a mess and a fix is due for everyone involved whether we like it or not