Thursday, July 22, 2010

GM - You Can't Make This Stuff Up

"DETROIT (AP) -- General Motors Co. says it will acquire auto financing company AmeriCredit Corp. so it can increase leasing and make more loans to buyers with low credit scores..."

"GM CEO Ed Whitacre said Thursday the deal will make GM more competitive in auto financing. GM executives have said their sales have been hurt by a lack of subprime and lease financing."

No comment necessary.



David Merkel said...

Sorry, KD, I will comment: this is why we bailed you out? To buy up other semi-healthy entities, rather than pay us off?!

One of my major arguments against the bailouts was that you don't bail out holding companies. Send the holding companies into insolvency and bail out the pieces you want to protect, if anything.

This stinks.

Joe said...

+100 to David's comment. One need not be any species of conspiracy-theorist to see the heavy hand of the government at work in this decision. There's no doubt in my mind that as long as the feds own a significant piece of GM the company's mission will be as much about social engineering as it is about automotive engineering.

Kid Dynamite said...

note: the story at the end of the link in the article has been completely re-written, in case anyone is wondering why the two paragraphs I excerpted seem to be taken out of context now.

Mike T said...

So much for GMAC (Ally), the financing unit we bailed out and own a chunk of as well. Remember how they were going to finance GM and Chrysler and we had to bail them out to make sure they could? Why didnt the govvie arrange a marriage there?

Kid Dynamite said...

I was told that GM's CEO, on the conference call, said they have over $70B in cash on the balance sheet. HEY, d-bags - PAY BACK THE GOVERNMENT THEN!

no, instead, they pretend that they are making GM a more well rounded firm (by acquiring a finance arm), so that the company will have more value for the IPO. fuck that - just give us back the money already.

Anonymous said...


*Every* other big-size car manufacturer will gladly lend sub-prime. Why does GM have to let these customers go somewhere else?

Let's say they they followed Kid Dynamite's impulses and only sold to prime credit customers/cash. Fewer sales! Shocker.

Now Kid and GM's competitors get to continue the GM beatings at their regularly scheduled times.

Kid's auto industry analysis: Fail

Kid Dynamite said...

anon: i covered that already in a previous post back in may - you can find it in my archive, i'm not going to explain it to you again.... actually, you KNOW i can't resist a good troll, so here goes:

simple answer: BECAUSE GM ALREADY FAILED AT IT. it's the same reason people don't want wall street banks taking big proprietary risks.

it's not a very hard argument at all - if you don't understand that GM already failed miserably at financing, then, you're alone on the island.

also, and pay attention, because this part is important, since i know you'll tell me GMAC was sunk by home loans, not auto loans: they already have access to all the subprime lending they need via ALLY and ACF - so what's the problem? the problem is that ALLY and ACF are exercising a little too much prudence for GM's taste. so GM needs to be the one on both sides of the table - talk about absurd for a company that already blew up and is a ward of the state.

if you think GM should be buying subprime lenders with the money on its balance sheet instead of paying back the government, good luck to you. i'm not wasting my time trolling that one with you.

Blue Moon said...

You're wrong Kid - it is going to be different this time. People are only going to buy things that they can reasonably afford - there will be no repos, defaults, personal bankruptcies because we have all learned our lesson this time I promise ;-) And GM is only going to lend to people with credit scores above 650.

Besides, we taxpayers don't need our money back -- look at all the Iphones and Ipads we're buying...

Hammer Player a.k.a Hoyazo said...

Lol @ what Blue Moon said.

What a joke.

Anonymous said...

Kinda cool that GS is paying it's fine to the SEC with our money too...

Since they so desperately needed to be a bank, how much banking are they doing?

Kid Dynamite said...

GS is relevant for a different reason - the same reason people don't want GS doing banking (with the Fed's money - our money) and prop trading is the reason people don't want GM doing subprime loans with the government's money.