Posts Tagged ‘gmac financial services’

Taxpayer Owned GMAC Rebrands as Ally

The $100 billion GMAC auto finance operation moves on.

by Ken Zino 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 Ken Zino 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…)

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U.S. Takes Controlling Interest of GMAC

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

by Ken Zino 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 Ken Zino 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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Leasing Now Available at Chrysler, Jeep and Dodge

An important sales tool reappears on all models after a long absence at the sales challenged maker.

by Ken Zino on Sep.16, 2009

Fong needs to move some metal at the Italian-controlled automaker.

Fong must "move metal" at the Italian-controlled automaker.

Chrysler Group LLC today announced it would offer a leasing option starting tomorrow for U.S. customers on all 2010 model year Chrysler, Jeep and Dodge vehicles through Chrysler’s preferred lender, GMAC Financial Services.

Year-to-date, Group sales are of -40% as the one-two punch of impending bankruptcy and a gas guzzling product line combined to knock the company’s vehicles off the consideration list of the few shoppers that were in  the marketplace.

Like other automakers, Chrysler, it appears, was caught short with an inadequate supply of small cars — or more troubling for its new taxpayer owners, lack of consumer demand for the cars  it has and will have for the next year or two —  just as demand for fuel efficient cars surged due to federal government financed incentives under the CARS program, aka Clunkers.

GMAC re-initiated leasing as a financing option at General Motors in early August in support of a lease promotion on select GM models, along with competitive standard rates on all new GM vehicles.

“ We are pleased to re-enter the leasing market so we can offer customers the opportunity to lease vehicles at rates competitive with the marketplace,” said Peter Fong, President and Chief Executive Officer–Chrysler Brand and Lead Executive for the Sales Organization, Chrysler Group LLC. “Our ability to offer additional financing options will benefit consumers who have long been fans of leasing and appreciate the flexibility this financing option gives them.”

Easy Terms!

Easy Terms!

For car shoppers looking for lower payments – long the allure of leasing – the new financing programs at both Chrysler and GM may not be of help.

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Chrysler Financial Repays Government Loans

Lending arm pays back $1.5 billion received in January.

by Joseph Szczesny on Jul.14, 2009

Could Capitol Hill Critics Sink the Fiat Alliance?

Last winter, lots of people predicted this day would never come. But mark this day down — one of the recipients of the government bailout money, Chrysler Financial, has repaid the U.S. Treasury, sending the $1.5 billion it received in January back to Washington.

Meanwhile while GMAC Financial Services Inc. said it will send the government a $271 million dividend check next month.

The repayment by Chrysler Financial and the special dividend from GMAC mark the first step toward repayment of the billions Detroit borrowed last winter when the U.S. auto industry and their finance companies were on the verge of collapse.

Interest Free!

Interest Free!

Chrysler Financial said Tuesday it has repaid in full the $1.5 billion of Troubled Asset Relief Program or TARP loans, which Congress approved last year to bailout troubled banks and the Obama administration used to help Detroit’s struggling automakers when Chrysler and GM were sinking fast. So far, the Treasury Department hasn’t asked for an early payment penalty.

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Treasury Adds Capital to GMAC Financial Services

GMAC financing is key to Federal auto bailout plans.

by Ken Zino 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…)

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GMAC moves on

GMAC Financial Services is staking a claim to its independence.

by Joseph Szczesny on May.15, 2009

"Given the recent financial market turmoil, people are looking for a safe, honest and efficient place to save."

"Given the recent financial market turmoil, people are looking for a safe, honest and efficient place to save."

General Motors CEO Fritz Henderson said this week that GM no longer has any representation on the board of GMAC. GM sold a majority interest in GMAC to Cerberus Capital Management back in 2006. Last December, GMAC was reorganized in an exchange for $5 billion in federal funds. When it accepted money from the Trouble Asset Relief Program (TARP), GMAC was required to loosen its ties to Cerberus and GM, which is why Henderson said he doesn’t always have up to the minute information about what’s going on at the big finance company.

GMAC, which is now being overrun by refugees from Wall Street meltdown, has now announced that it is changing the name of the consumer bank that is one of the keys to its future plans. 

“The world doesn’t need another bank, it needs a better bank.” This philosophy is at the heart of the launch of Ally, a new brand for a U.S. online bank designed to disrupt the status quo and challenge win-lose practices in the banking industry, GMAC said. Ally Bank offers a variety of savings products, including no-penalty certificates of deposit (CDs), online savings accounts and money market accounts.

“We are launching a new brand with a new approach of treating customers with total transparency,” said GMAC Chief Executive Officer Al de Molina. “Unlike other banks which depend on fees as a business model, we want to make money with customers, not off customers.”    (more…)

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Chrysler Fires 789 Dealers

Cleaning up the distribution system is key to a viable company.

by Ken Zino on May.14, 2009

PentaStar

The 789 terminated dealers accounted for only 14% of Chrysler's total sales volume.

Chrysler LLC this morning filed a motion with the U.S. Bankruptcy Court in New York cancelling its U.S. dealer agreements with 789 dealers in 49 states. The only state spared was Alaska. If the court approves, and there is no reason to think it won’t, 2,392 Chrysler, Jeep or Dodge dealers will continue with the new company as it emerges from bankruptcy in a global alliance with Fiat.  

For owners and prospective customers, this latest development clarifies where to buy or where to get Chrysler products serviced. The 789 terminated dealers accounted for only 14% of Chrysler’s total sales volume.

“This is a difficult day for us, but we’re going forward with the approval of the bankruptcy court,” said vice chairman Jim Press.  “There are no winners and no losers. This is the way it is,” said Press, adding Chrysler will now have a “once in lifetime” opportunity to build a powerful dealer network that maximizes dealer franchise value, sales and convenience for customers. 

Clearly the losers are the 789 dealers who will no longer be authorized to handle Chrysler products. However, many of them, 44%, were dualed with other makes, or sold more used cars than new cars, creating opportunities for them to remain in business. (more…)

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