Tuesday, October 27, 2009

Yes, We Can´t..... GMAC Scores Bailout Hattrick.....

This kind of taypayer generosity / backstop is one of the main reasons ( add to this ZIRP & QE ) the "smart money" has increased the risk appetite to the highest point since April 2006 ( just in time after one of the biggest rallies ever .....without any meaningfull pullback) , so far they have almost perfectly manage to go "ALL IN"close to the recent market top, with cash levels at the lowest point since Jan 2004! not an overstatement, taking the latest market action into account the post is looking better on a daily basis..... )..... Stories like this are one of many reasons why i´m bullish on GOLD......

Denke das genau diese Art der "Problemlösung" zu Lasten der Steuerzahler einer der entscheidenden Gründe ( neben Nullzinspolitik und "Quatitive Easing" ) ist das weltweit die professionellen Investoren Ihren Risikoappetit auf den höchsten Stand seit April 2006 hochgefahren haben ( gerade noch rechtzeitig nachdem die Märkte einen der größten Kursanstiege der Geschichte ( ohne eine nennenswerte Korrektur ) hingelegt haben, aktuell sieht es so aus als wenn Die "Profis" es fast punktgenau geschafft haben zum Markettop "All In" zu gehen, oder wie sonst soll man es bezeichnen wenn man bedenkt das die Cashlevels auf dem niedrigsten Stand seit Januar 2004! sind, mir persönlich bereitet besonders dieser Link tagtäglich mehr "Freude") ..... Erinnere im Angesicht solch "dollen" Meldungen noch einmal an mein gestriges Posting zum Thema Gold.....

GMAC Asks for Fresh Lifeline WSJ
The U.S. government is likely to inject $2.8 billion to $5.6 billion of capital into the Detroit company, on top of the $12.5 billion that GMAC has received since December 2008, these people said.
The latest infusion would come in the form of preferred stock. The government's 35.4% stake in the company could increase if existing shares eventually are converted into common equity.

Federal officials also are moving to shore up GMAC's ability to fund its daily operations, with the Federal Deposit Insurance Corp. telling the company Tuesday the agency will guarantee an additional $2.9 billion in debt, according to people familiar with the discussions. The FDIC guarantee will make it easier for the company to sell debt to investors. The FDIC backed $4.5 billion in GMAC-issued debt earlier this year.
The FDIC approval came just four days before the expiration of the regulator's program that guarantees debt issued by certain banks. It ended months of tense negotiations between GMAC and regulators.

At GMAC, the likelihood of a third infusion increased when the government's stress-test results were released in May. The tests were conducted to determine whether banks would need more capital to continue lending if the economy deteriorated in 2009 and 2010. The test concluded GMAC needed $11.5 billion in common equity to continue lending in a stressed economy.

GMAC raised some of the money directly from the government, but a significant hole remains. The company hasn't been able to attract much capital from private investors because it isn't listed as a public company, forcing GMAC to begin negotiating with the government to find the remaining funds. GMAC and Treasury officials are now negotiating about exactly how much capital the company needs.

People close to GMAC said they don't expect the government to call for changes in management as a result of the likely infusion. The company posted a second-quarter loss of $3.9 billion amid rising loan delinquencies and the continued U.S. auto slump. It expects to release third-quarter earnings next week.

Mr. de Molina's search for capital brought him to the government's door.
The Fed awarded GMAC status as a bank-holding company and Treasury injected $5 billion in December 2008. It came back with an additional $7.5 billion on May 21. The Fed also waived rules to allow the bank to pass assets down into its bank division, and the FDIC reluctantly agreed to issue "up to" $7.4 billion in government-backed debt. The FDIC approval issued Tuesday brings GMAC to the full amount authorized in May.

[Helping Hand]

In May, GMAC also launched a new brand for its online bank, called Ally Bank. Its pursuit of deposits at high rates became a key leg of its strategy, since deposits provide a cheap form of funding, but the taxpayer-assisted approach rankled competitors and the FDIC.

The dispute nearly cost GMAC its chance at the final $2.9 billion in FDIC debt guarantees. The two sides were able to hammer out an agreement that requires GMAC to keep its rates at certain amounts in exchange for the support, according to people familiar with the situation.

Rolfe Winkler

Taxpayers are lending themselves money to buy cars (via GMAC). To buy houses (via Fannie, Freddie and very soon FHA). To buy anything and everything that has to be financed.

Chris Whalen : Zombie Love: Barack Obama, GMAC and Ally Bank

If Citigroup (NYSE:C) is the Queen of the Zombie Dance Party and AIG (NYSE:AIG) the King, then GMAC is certainly one of the children. In relative terms, GMAC has received far more subsidies than any other zombie and seemingly has no access to the private markets in terms of raising new equity.....

Looking at the latest 10-Q from GMAC filed with the SEC, the only question we have is why isn't GMAC already in bankruptcy?

While GMAC's total consoldiated assets are down, Ally Bank's assets have grown by nearly 25% in the past quarter, fueled by copious television advertising and federal subsidies. The term "moral hazard" comes to mind. By propping up GMAC and Ally Bank with taxpayer dollars, the Treasury is hurting sound, well-managed banks.....

Note too that as of Q2 2009, Ally Bank was funding more than 17% of its now $42 billion in assets via the Federal Home Loan Banks -- yet another subsidy and another striking indcator of growing moral harzard......

Federal bank regulations generally identify 15% as the threshold for unsafe and unsound practices with respect to the use of FHLB advances for funding, but it seems that GMAC is exempt from these rules as well.....

Mean Street: GMAC = Insanity Deal Journal

Well, we didn’t really need it, but now we have it. Today’s WSJ piece on the bailout of auto-lender GMAC is yet further proof that there is no end to the insanity of the “Great Detroit Bailout.”

We’re not just saving failed carmakers. We’re saving GMAC, the failed financier of failed mortgages and failed carmakers…for the third time.

Last winter, we had to “help” Detroit with some temporary loans. By spring, we had to “save” Detroit with tens of billions in fresh equity. By summer, we had to “kick-start” Detroit with the Cash for Clunkers. And here we are in autumn, still at it. By winter, we’ll be in a strait-jacket we can’t get out of.

And for what? To save GMAC?

This is a business that for years lent money to lots of Americans to buy homes and cars they couldn’t afford. Remember the unsustainable housing boom? GMAC.

The unsustainable Hummer and Escalade boom? GMAC. Our unsustainable economy? GMAC.

And after the boom, comes the bust — which is exactly what GMAC is.

BANANA REPUBLIC ....... ;-)

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