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Posts Tagged ‘U.S. Department of the Treasury’

Taxpayer Owned GMAC Rebrands as Ally

The $100 billion GMAC auto finance operation moves on.

by on Jul.14, 2010

Your dollars are in his hands. If he cleans up the GMAC mess, taxpayers will be paid back.

Ally Financial Inc. (Ally) will rebrand its GMAC consumer and dealer-related auto finance operations in the U.S., Canada and Mexico and begin using the Ally name next month.

The latest move follows the transition of the GMAC corporate entity to Ally Financial during May 2010.

Both are attempts to leave behind GMAC’s tattered image and distance the company from the wildly unpopular taxpayer financed bailouts of last year.

The Ally brand will be used for auto financing activities in the three North American markets, including activities to support the following manufacturers: General Motors, Chrysler, Saab, Thor Industries and FIAT Mexico.

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Following the Money!

The U.S. Department of the Treasury last December provided an additional $3.8 billion in capital from taxpayers to GMAC to keep it solvent, in addition to almost $14 billion previously forwarded. (See Taxpayer Owned GMAC Reports Record Q4 Loss and U.S. Takes Controlling Interest of GMAC ) Results for the 2009 fourth quarter and full year were largely affected by losses related to GMAC’s reckless lending practices in its mortgage operations.

The Obama Administration has thus far been unable to implement any reforms whatsoever in financial regulation after the collapse of the Lehman brothers or AIG, among others, in the fall of 2008.

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Taxpayer Owned GMAC Reports Record Q4 Loss

The preferred lender to reorganized Chrysler Group and General Motors Company remains in intensive care. Outlook uncertain.

by on Feb.04, 2010

Your dollars are in his hands. If he cleans up the mess, taxpayers will be paid back.

GMAC reported this morning a record Quarter 4 loss of $3.9 billion from ongoing operations, compared with a profit of $7.5 billion a year earlier.

A net loss of $5.0 billion bought the total full-year net loss to $10.3 billion, compared to net income of $1.9 billion in 2008.

Results for the 2009 fourth quarter and full year were largely affected by losses related to GMAC’s reckless lending practices in its mortgage operations.

“Key steps during the year included: diversifying the profitable automotive finance business with the addition of Chrysler; launching the Ally Bank brand, which is a key part of our funding profile; strengthening our capital and liquidity positions; and implementing major restructuring actions to minimize risk related to the legacy mortgage business,” said GMAC Chief Executive Officer Michael A. Carpenter.

The U.S. Department of the Treasury last December provided an additional $3.8 billion in capital from taxpayers to GMAC to keep it solvent, in addition to almost $14 billion previously forwarded.

Treasury under its financial health check assessment, the so-called Supervisory Capital Assessment Program (SCAP), said that additional capital was needed for tottering GMAC, which was suffering from bad loans and collapsed residual values for leases of General Motors vehicles, as well as failed loans in the real estate markets.

As part of the additional funds, Treasury restructured its investment in GMAC “to protect taxpayers and put GMAC in a position to raise private capital and pay back taxpayers as soon as practicable.” As a result, U.S. taxpayers now own 56% of GMAC’s common equity, and $2.7 billion in 8% coupon trust preferred securities, and $11.4 billion in 9% coupon mandatory convertible preferred stock. Taxpayer ownership could increase to 70%, according to GMAC.

Taxpayers are clearly at risk here, given their already large 50% holding of General Motors Company, which lost $1.2 billion in its latest quarter.

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Follow Your Money!

The Obama Administration, facing unanimous Republican opposition, has thus far been unable to implement any reforms whatsoever in financial regulation 16 months after the collapse of the Lehman Brothers and AIG, among others, in the fall of 2008.   (more…)

U.S. Takes Controlling Interest of GMAC

Latest U.S. taxpayer bailout costs another $3.8 billion.

by on Dec.30, 2009

GMAC was unable to raise the capital needed from the still ailing private markets, so our Treasury became the lender of last resort.

The U.S. Department of the Treasury announced this afternoon that it is providing an additional $3.8 billion in capital from taxpayers to GMAC to keep it solvent.

Treasury under its financial health check assessment, the so-called  Supervisory Capital Assessment Program (SCAP), said last May that additional capital of $5.6 billion would be needed for tottering GMAC, which was suffering from bad loans and collapsed residual values for leases of General Motors vehicles, as well as failed loans in the collapsed real estate markets.

GMAC now has the capital buffer required under SCAP, which is needed to meet the worse-than-expected economic scenario after the economic stimulus program proved ineffective at turning the economy around. The $3.79 billion cash infusion was less than the $5.6 billion originally anticipated by the Federal Reserve due in large part to lower-than-expected losses from the General Motors bankruptcy filing.

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Bailouts!

In November, GMAC announced that its head had departed and a new CEO, Michael A. Carpenter, was coming in from the financial services industry and taxpayer subsidized Citigroup. The appointment of Carpenter, with disputed accounts of whether the previous CEO, Alvaro de Molina, was fired or had resigned, raised questions about the reckless practices of Wall Street, which is responsible for the ongoing Great Recession and the collapse of the global banking system.

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GMAC Needs Another, Yet Another, Bailout

Financial services provider to Chrysler and GM remains ill.

by on Nov.17, 2009

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Wants less cash?

GMAC Financial Services (GMAC) is under scrutiny today after an announcement late yesterday that its head had departed and a new CEO, Michael A. Carpenter, was coming in from the financial services industry.

The bank holding company remains in trouble over bad loans in the housing and auto markets.

The appointment of Carpenter, with disputed accounts of whether the previous CEO, Alvaro de Molina, was fired or resigned, also raised questions about the reckless practices of Wall Street, which is responsible for the ongoing Great Recession and the collapse of the global banking system.

What this means for car buyers or U.S. taxpayers is not immediately clear — beyond the obvious observation that the credit markets are still not fixed and more raids on the U.S. Department of the Treasury are forthcoming.

This is wreaking havoc with the economy, which has the highest unemployment rates since the Great Depression, and as the Obama Administration privately contemplates another stimulus programs to fix its previously failed stimulus program that was an attempt to fix the failed economy under the Bush Administration.

Carpenter, 62, has only served on the GMAC board since May of this year. His previous experience includes CEO positions at Citigroup’s Global Corporate & Investment Bank, Salomon Smith Barney, Travelers Life & Annuity and Kidder Peabody. During his 35-year career, Carpenter has also held senior positions at GE Capital, General Electric and Boston Consulting Group.

The Obama Administration has thus far been unable to implement any reforms whatsoever in financial regulation more than one year after the collapse of the Lehman brothers or AIG, among others, last fall.

Follow The Money!

Follow The Money!

Perhaps most troubling for taxpayers, who have already bailed out bankers and irresponsible financial institutions with almost a trillion dollars in borrowed money — that is trillion — is that the board of GMAC also said that it had asked the Treasury to postpone its decision on an additional injection of capital.

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General Motors Company Arises from the Ashes

The new GM launches today, just 40 days after bankruptcy.

by on Jul.10, 2009

Fritz Henderson, CEO GM Company, photo TBD

The speed of the bankruptcy proceeding could not be matched by an impending reorganization plan.

General Motors Company, or the new GM, is abandoning the old way of doing business that drove it into bankruptcy, according to its CEO. He also will streamline its organization, focus on “best in class” products and attract enough customers to stop its sales slide.

The U.S. taxpayer-owned company is expected to go public by the middle of next year. And GM wants to pay off its U.S. loans that are currently keeping it afloat well before the required  2015 date.

These are all extremely ambitious goals, to put it politely, coming from a management team comprised almost entirely of old-line GM executives who set the policy and made the decisions that resulted in the largest corporate bankruptcy in U.S. history.

“One thing we have learned from the last 100 days is that GM can move quickly and decisively,” said Fritz Henderson, CEO. “Today, we take the intensity, decisiveness and speed of the past several months and transfer it from the triage of the bankruptcy process to the creation and operation of a new General Motors.”

The problem confronting GM — new or old — is the continuing decline in production, sales and share in the toughest vehicle market since WW2.

Keep up with the Reorganization!

Keep up with the Reorganization!

Little new ground in the all critical product or cost cutting areas was covered by Henderson in his first press conference as the operational head of GM Company, which was created today by an asset sale approved by a bankruptcy court in New York on July 5th. In fact, the cliche’s of a product and customer focused organization, repeated over and over, seemed more suitable for an internal pep rally than for a news event after a near death experience for a  company whose future is still by no means assured.

Even the claim that GM can move quickly was cast in doubt by the lack of detail in just how GM is going to trim its bloated corporate ranks.  Henderson’s new management organization was being prepared in anticipation of a July 31st closing date, and the restructuring could not keep pace with the swiftness of the bankruptcy proceeding.

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A Closer Look at the General Motors Asset Sale just Approved by the U.S. Bankruptcy Court

Yes, an appeal has already been filed. The outcome will almost certainly be the same as with Chrysler. GM's sale will proceed.

by on Jul.06, 2009

Ex GM Chairman and CEO Rick Wagoner,center, Ex GM Vice Chairmen Bob Lutz, left, and survivor Fritz Henderson, right

General Motors Company will be headquartered in Detroit and led by Fritz Henderson as the president and chief executive officer.

The U.S. Bankruptcy Court for the Southern District of New York approved the sale of almost all of General Motors Corporation’s assets to NGMCO, Inc., a new legal entity funded by U.S. taxpayers for about $51 billion. An appeal by product liability lawyers is unlikely to halt the sale at noon on July 9th. 

When the sale closes, during the next week, NGMCO, Inc. will change its name to General Motors Company and continue to operate much like GM did in the past, albeit with only four core brands, and far fewer employees and dealers. Current GM employees will be offered positions by the new company. The current General Motors Corporation will then change its name to Motors Liquidation Company. It will ultimately be dissolved under direction of the court.

Stay auto news solvent!

Stay auto news solvent!

General Motors Company will be headquartered in Detroit and will be led by Fritz Henderson as president and chief executive officer. Edward E. Whitacre, Jr. is chairman of the board of directors. 

Also selected to serve on the board of directors are six current members of the GM Corporation board — Erroll Davis, Neville Isdell, Kent Kresa, Philip Laskawy, Kathryn Marinello and Fritz Henderson. 

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GM Board To Meet as Bondholders Refuse Swap

Bankruptcy is next step as U.S. Treasury terms cannot be met.

by on May.27, 2009

It's only a question of when the GM filing comes.

Out of gas? It's only a question of when a bankruptcy filing comes.

General Motors Corporation announced this morning the expiration of its exchange offers for $27.2 billion of its unsecured public notes that began on April 27, 2009.

GM also said that no further tenders of notes will be accepted and any notes previously tendered under the exchange offers will be promptly returned to the tendering holders. 

The offer to exchange debt for equity expired at 11:59 p.m. EDT on May 26, 2009. GM said the principal amount of notes tendered was substantially less than the amount required by GM to satisfy the debt reduction requirement under its loan agreements with the U.S. Department of the Treasury. GM is currrently being kept solvent by $19.6 billion in taxpayer loans.

Bondholders were offered 225 shares of stock in the new company or a roughly 10% stake. GM bonds are trading as low as 6 cents a dollar this morning.

Since massive debt reduction under GM’s oft revised viability plan is key to survival, it is now virtually certain that bankruptcy will be used to obtain such reduction. GM’s CEO Fritz Henderson has repeatedly said that GM would reorganize with the help of bankruptcy if the terms of its viability plan, a 180-degree reversal from his previous position while working for the Treasury deposed chairman, Rick Wagoner.

Chrysler LLC entered bankruptcy protection last month to obtain such relief.

GM Bondholders, some them retirees and financially strapped small investors, will likely now lose all of their money.  Thus, the ongoing tragedy produced by the  collapse of the U.S. auto industry continues to drag the entire economy down.

The GM bankruptcy will be among the largest and most complicated in U.S. history, mirroring the collapse of the U.S. financial system late last year.

The GM board is meeting to consider next steps.

GM has also cancelled the meetings of noteholders of non-US dollar-denominated notes, which were scheduled to take place on May 27, 2009.

Treasury Adds Capital to GMAC Financial Services

GMAC financing is key to Federal auto bailout plans.

by on May.22, 2009

While Chrysler and Cerberus are separated, the hedge fund still owns part of its new finance company.

While Chrysler and Cerberus are now separated, the hedge fund still owns part of its new finance company, which is being propped up by the government.

The U.S. Department of the Treasury has strengthened the weak balance sheet of GMAC Financial Services by adding $7.5 billion in capital to the ailing finance company and bank.

The troubled lender had a first-quarter loss of $675 million, up from $599 million a year ago.

GMAC sold $7.5 billion of mandatorily convertible preferred (MCP) membership interests and warrants to the U.S. Treasury. The U.S. Treasury immediately exercised the warrants and GMAC issued an additional $375 million of MCP. The investment included $4 billion of MCP related to GMAC’s agreement with Chrysler LLC to provide automotive financing to Chrysler, and $3.5 billion of MCP toward the Supervisory Capital Assessment Program (S-CAP) requirement.

This reduces the new capital required to $5.6 billion after GMAC failed a Treasury audit earlier this month. After analyzing GMAC’s books, Treasury determined that it would need an additional $11.5 billion in capital in order to ensure survival as the Great Recession continues on. By failing the so-called stress test GMAC was put under the Supervisory Capital Assessment Program (S-CAP).

The latest loans are only part of the actions the U.S. government is taking to prop up GMAC, which is vital to its auto bailout plans. The company has been designated as the wholesale and retail lender for GM and Chrysler when it emerges from protection of the U.S. Bankruptcy court in New York. GM will almost certainly file for similar protection by June.

The Federal Deposit Insurance Corporation is now involved in assisting GMAC, by guaranteeing as much as $7.4 billion in new debt to be issued by GMAC as part of S-CAP.    (more…)