Congressional Oversight Panel criticizes handling of GMAC
Submitted by
CalculatedRisk on Wed, 03/10/2010 - 9:30pm (72 comments)
Shopping at Amazon?
Wait! If you click on the Amazon banner link at the top of the page first, HCN will get a percentage of anything you purchase for 24 hours!
Open predictions
Our local book authors
User login
Who's online
There are currently 5 members and 148 guests online.
Currently online
Recent Recommendations
It's been a long time since I've been first. And it will be a longer time until GMAC stops losing our money. My guess is
will have 
first.
You're welcome.
They don't have one & they are still operating?
Nemo, let the
catch a little shuteye, it's late.
HAHAHAHAHAHAHA!!!!!!
lets all buy a Toyoda
dryfly wrote:
GMAC, or the Treasury?
If only Congress had a "viable exit plan" for the U.S. Government.
TJ and The Bear wrote:
Touche...
dryfly,
Your economic read seems to be onto something. Didya notice that the manufacturing states were the ones showing job market improvements?
Well I've known some firms that where 'technically' still operatational whose only biz plan was 'five o'clock'... i.e. just make it to five o'clock and worry about the rest tomorrow. But that's not much of a plan.
Nemo wrote:
If only Congress had a "viable exit plan" for the U.S. Government.
I'm sure most have an viable exit plan FROM the U.S. government, if not from the U.S. itself... being true patriots and all...
dryfly wrote:
Is that "where" or "were"?
TJ and The Bear wrote:
Ya - I posted on this earlier. On a recent plant visit I made with some guys from out east to a factory here near the Twin Cities... we drove by a billboard on the interstate where a machine shop was advertising their job openings - those guys about got whiplash making a second take. 'Did you see that - advertising job openings on a billboard - if they did that back home we wouldn't be able to get to work due to all the applicants dropping off resumes!'
I knew the company - they are busy - its legit. But it isn't easy 'push button' machining either - high end medical & aerospace.
Here is another article that lays out very nicely the contradiction that you can reduce private debt and public debt at the same time (assuming a constant CA balance). All you do is run in circles killing the golden goose.
Leading PIIGS to Slaughter - Credit Writedowns
... The underlying principle flows from the financial balance approach: the domestic private sector and the government sector cannot both deleverage at the same time unless a trade surplus can be achieved and sustained. Yet the whole world cannot run a trade surplus. More specific to the current predicament, we remain hard pressed to identify which nations or regions of the remainder of the world are prepared to become consistently larger net importers of Europe’s tradable products. Countries currently running large trade surpluses view these as hard won and well deserved gains. They are unlikely to give up global market shares without a fight, especially since they are running export led growth strategies. Then again, it is also said that necessity is the mother of all invention (and desperation, its father?), so perhaps current account deficit nations will find the product innovations or the labor productivity gains that can lead to growing the market for their tradable products. In the meantime, for the sake of the citizens in the peripheral eurozone nations now facing fiscal retrenchment, pray there is life on Mars that exclusively consumes olives, red wine, and Guinness beer.
squidward wrote:
were - if my spell checker says it's right its write.
dryfly wrote:
That's called kicking a big ass can just a little ways down the road. Sure looks like we're headed there as a country.
CR's post writes: "...explain its approach to the treatment of legacy shareholders"
Weren't the shareholders going to be wiped out?
dryfly wrote:
So those firms are gone?
RE wrote:
MLM wrote:
Not quite. That is not in the formula. It is kind of a domestic thing...
Let's see here, Obama lashes out at banks, auto bosses, insurance... how about lashing out at GMAC or AIG? never mind
squidward wrote:
Some - yes - definitely. Some still kicking the can - barely. Sloppy grammar & spelling - I'd didn't make clear & would like to blame phat phingers & fonix - but it is really operator error.
Point is - a lot of smallish shops got away with only having the 5PM Plan - its unthinkable that GMAC doesn't have a biz plan with exit strategies & contingencies in place - you might not use the plan [throw it away when the battle starts] but starting with a 'viable' plan is still essential.
squidward - the number of bankruptcies I'm currently running into leading to full liquidation right now is staggering. It is still happening. On the other hand I work with shops that are getting very busy [and as a result hiring] taking some of the work that was in those BK'ed shops. It is really crazy.
RE wrote:
That's because the formula assumes constant money supply. But that is most certainly not the case.
RE wrote:
Here is the formula again. Printing will not do a thing:
The Retirement Lottery - Credit Writedowns
... In order to be able to explain the forces at work here, I need to take you back to the class room again for a minute or two. Please stay with me! Paramount to understanding what is currently going on and what is likely to happen over the next several years is the following equation, also known as the national income accounting identity:
G – T = (M – X) + (Y – T – (C + I))
where G – T equals the government balance (spending less taxes), M – X is net foreign capital inflows (the mirror image of the current account deficit which is usually expressed as X – M or exports minus imports) and Y – T – (C + I) equals net private savings (national income less taxes less the sum of all private investments and consumption).
Don't forget that GS and MS were not the only two entities to be granted bank status by the Fed in a quick approval.
Less Control for GM, Cerberus as GMAC Changes to Bank - washingtonpost.com
"The Federal Reserve on Wednesday approved GMAC's application to become a bank holding company -- allowing the lender to qualify for the government's $700 billion rescue fund."
Check Out This Chart
Why didn't GMAC be forced into bankruptcy?
John W. Snow relationship map - Muckety
RE wrote:
OK, let's assume we have 0 net capital inflows. In that case, you say spending less taxes (i.e. government borrowing) must equal net private savings. I say Ben can print up an extra trillion dollars, spend it, and the equation is broken.
I bought GMAC bonds, but not GM or Chrysler stock.
Was I lucky?
I'm still working on my choices for foreign bonds. That's where the risk premium will be this spring and summer. I have some cash waiting. I'll be able to see if I am as smart as I think I am.
Hubris. Source of great fortunes, and amazing flameouts.
I think that chart would be more interesting (economically, if not ideologically), if it subtracted total government borrowing instead of total government spending.
some investor guy wrote:
I listened to an interview of Axel Merk on Bloomberg last week saying that this is a great time to be buying the Euro.
MLM wrote:
Borrowing doesn't affect GDP as spending does.
AAAArrrghh
That's as bad as Paulson.
TJ and The Bear wrote:
But it's the percentage of govt. spending that is borrowed that tells us just how deep we are in the
. Same with household financial obligations as opposed to total household spending. In other words, how much of our supposed GDP growth was really just borrowed money injected into circulation.
Edit: And then I'd use growth in the Fed's balance sheet instead of CPI. That would be a pretty interesting graph.
OT, Portland (OR) Water Bureau gets tough on non-payers, including a HOA. Water Bureau to landlords: Pay up or else
And, in an attempt to actually make an on topic comment, I believe the reason kid gloves were used on GMAC is because it is a huge provider of credit into the economy. The Feds were probably thinking that some reasonable percentage of that credit is going to get repaid, which makes it somewhat cheaper than just borrowing the money and handing it out.
Why Fannie and Freddie will generate losses for years:
HAMP Modifications: reduce interest rate to as low as 2%. Rate stays at modified rate for 5 years.
Also, the servicing fee does not go away, so Fannie/Freddie only get 1.75% or less.
Funding cost for mortgage : 4%.
ergo, For every HAMP loan on their books, they have negative carry. Between them, they will probably end up with 500K HAMP loans.
After five years, the HAMP interest rate gets bumped up, at which point they will default.
So after 5 years of negative carry, Fannie/Freddie pay the loss.
The next Presidential election is in 2012. HAMP loans modified today will reset in 2015.
Would you take on the credit risk of Fannie/Freddie under this circumstance???
San Francisco Hotel Owners Files for Chapter 11 (Update1) - BusinessWeek
"The owner of two San Francisco boutique hotels and an affiliate owning a third property filed for Chapter 11 bankruptcy court protection.
Personality Hotels III LLC, the owner of Hotel Frank and Vertigo Hotel, and Hotel Metropolis II LLC, the owner of Metropolis Hotel, filed bankruptcy petitions today in U.S. Bankruptcy Court in San Francisco.
Personality Hotels III listed $10 million to $50 million in assets and $50 million to $100 million in debt. Hotel Metropolis II listed $1 million to $10 million in assets and $10 million to $50 million in debt.
The company, Personality Hotels, owns four other hotels and is San Francisco’s largest boutique hotel operator, according to a statement last year. Personality Hotels spent $10 million renovating Hotel Frank and $5 million on renovating Vertigo Hotel, named after the Alfred Hitchcock movie, it said last year."
I guess people don't generate enough garbage these days
Trash Hauler EnviroSolutions Files for Bankruptcy Protection - BusinessWeek
March 11 (Bloomberg) -- EnviroSolutions Holdings Inc., a U.S. trash hauler and landfill operator, and 21 of its affiliates filed for Chapter 11 bankruptcy court protection.
The company has $100 million to $500 million in both assets and debt, according to filings yesterday in U.S. Bankruptcy Court in Manhattan.
dryfly wrote:
Why would they? Private equity just rolls the bum and leaves the body in the alley for someone else to clean up.
Notice that even though Nemo is second, his time stamp is earlier than the first comment? There's skullduggery afoot.
Reminds me of "The Sting."
Elizabeth Warren is not a hero, but she does do the things that folks won't do that need to be done.
It's the Credit Default Swaps ghostface. I spent most of my time in the past almost three years now learning about them. I was one of the people that was hollering about them a couple years ago. Most people seemed to think they were a wash and not a factor. I watched Lehman go down and realized they would not let another large entity go under that could trigger another possibly larger ripple. I think they realized that ripple was going to be a tsunami. They've bet a Quadrillion freaking dollars. Isn't that somewhere in the vicinity of 4 times the Worlds assets?
ghostface, I think it gives people time to try and sell etc in those cases. I know mine tops out at 5.25% but it won't reach that until 2018. Even at that rate I will be fine sans Mad Max in which case nobody will be fine and my mortgage will be the very least of my problems. I think people that went through what I went through and stuck it out and make it through that five years really DO want to live in their homes. I know I can't be that one "special" case. I know others that are actually in somewhat the same situation with elderly parents and illness etc.
ecoshift wrote:
Given the extreme importance of these things, and the strength and number of those opposed to what she's trying to do,...I don't see how that doesn't qualify as heroic.
Nifty...
http://i.imgur.com/C5hAo.gif
This doesn't sound great...
Senate Talks Said to Advance on Consumer Unit Powers, Oversight - Bloomberg.com
Someone said Greece was old news?
Greeks Brace for Protests, National Strike Over Budget Cuts - Bloomberg.com
ecoshift wrote:
"The hero is no braver than the ordinary man, but he is brave five minutes longer." - Emerson
"A hero is an ordinary individual who finds the strength to persevere and endure in spite of overwhelming obstacles.” - C. Reeve
"Courage is what it takes to stand up and speak; courage is also what it takes to sit down and listen." ~Winston Churchill
"True courage is not the brutal force of vulgar heroes, but the firm resolve of virtue and reason." ~Alfred North Whitehead
I'll say that Warren appears to have become more "radicalized" as she gets more involved with TARP oversight. Initially she was too conciliatory. ("Found her voice" sounds right: Wall St. Is Winning Elizabeth Warren "Speechless" About Record Bonuses: Tech Ticker, Yahoo! Finance
"Heroic" would be reserved for a stronger voice, however. Haven't heard from Alan Grayson in awhile...
I'm hoping the young Democrats see Dodd for the lame fuck that he is. Judd, Corker, are useless.
Of course a stand-alone Consumer Financial Protection Agency would be just a baby step, but anything short of it would be going back in the womb.
RE wrote:
Everybody wants to grow their way out through exports.
That tells you what's happening.
Internal wages aren't high enough to maintain local demand.
Exactly broward. So we all sit spinning our wheels waiting for the uber rich to figure out they need to pay the peons more or the whole house of cards comes crashing down. The horror.
1 currency now -yogi wrote:
Please reconsider whether small acts of heroism are not worthy of mention. And whether or not a "hero" has to don the mantle at once, or perhaps grow into the role.
Although I agree that she's not exactly the stuff of epics, considering the evils she is facing, there's definitely room for Ste. Elizabeth slaying the Dragon on the tapestry.
Comrade Kristina wrote:
Work shrinks over time -> higher supply of workers + lower supply of work = falling wages.
It's not that hard to figure it out.
It's a tragedy of the commons...
"It's just a little bit of history repeating"
1 currency now -yogi wrote:
SS,DD.
LOL.
YouTube - Propellerheads - History Repeating (1997) ►STEREO◄
Ho ho, what's this?
HSBC Private Bank Suisse Says 15,000 Affected by Data Theft - Bloomberg.com
Wonder if it's in any way connected to a tax authority getting sh!tty livid about non-cooperation.
C
I am shocked that people even insinuate that the tax payer will loose money off of TARP et al bailouts. I just can't believe that congress would allow it to happen.
I'm hoping that is just the Suisse HSBC, I have an HSBC direct account and I'm not really up to messing with a stolen identity.
1 currency now -yogi wrote:
YouTube - Alan Grayson Introduces Public Option Act
Just watched Timmah's testimony today. Chair Jose Serrano (D, NY) was impressive, but didn't dig too deep. Some questions were raised whether Treasury is looking into GS re Greek style abuse of taxpayers, but the Forehead "of course couldn't comment" about actual investigations.
Fattah (D, PA) then heaped praise on
for their $500 MM small business lending program. BB's for bonuses, MM's for the minions.
Oh there's Grayson. A public school kid from the Bronx who went to Harvard but didn't forget where he came from.
4 page public option. Buy in to Medicare at cost. Heroic speech.
From previous thread:
Yes, but that does not mean your incorrect.
If they conduct the stress test without off book SIVV's, etc, and actually mark to market what they have on their books, then I agree stress tests are good, but should these not be done by the regulators every six months or so any way.
I don't think I'm loosing sense of reality, but at times I really wonder if my perception of the markets is even close to reality.
Kauai_Kahuna wrote:
I doubt that with out those assets, they are solvent.
Seems just Suisse. But - wow - think of the awkward possibilities. Stolen identity and tax evasion in one.
Great game theory exercise. Bob loses his account data. Bob hasn't paid taxes on the sheltered earnings. Does Bob report, who to, when, and how; or does he wait to be contacted? Does the bank assume Bob is in this situation and chooses not to clear the mess promptly, waiting to be contacted?
What fun.
C
A Congressional Committee is composed of people who were there when Congress let this stuff happen in the first place. Everybody knows that Congress will NEVER go back to correct something that is wrong, so a report like this is just mindless yapping.
Wow, the Government (we, the people) owns 56.3% of GMAC, yet it outsources the call centers to the Philippines. In the meantime, the majority owners of this company are hovering at a 10% unemployment rate!
sdtfs wrote:
I take it back. Elizabeth Warren is my hero.
So great to know that government is operating so efficiently and hasn't changed its spots at all. They continue to take our money and use like they always have... like monopoly money.