Woody Guthrie once wrote “some will rob you with a six gun and some with a fountain pen”. If Stephen Feinberg, owner of Cerberus Capital pulls off his latest deal in making GMAC into a Bank Holding Company, he will be the single greatest beneficiary of TARP funds. First with the bailout of his Chrysler holdings and now GMAC.
GMAC and its parents secured some breathing room last week when the Federal Reserve approved its application to become a bank-holding company. As a bank, the lender may secure access to federal funds and can sell government-backed debt at a time when it has little in the way of alternative funding sources. Analysts at CreditSights estimated it may seek as much as $6.3 billion in government assistance.
Unlike GM, which is a public company with millions of shares outstanding, Feinberg’s company is private and secret. Why this Billion dollar operator who pays himself $50-100 million a year should be the beneficiary of our collective largesse is beyond me. He bought GMAC and Chrysler at the top of the market and made the two dumbest bets on the future of the auto industry.
And we the taxpayers are going to bail this idiot out. I don’t get it.
14 responses so far ↓
Joshua M Brown // December 28, 2008 at 7:00 pm |
more bailouts/ bank holding companies
tee hee…hooray for capitalism
http://thereformedbroker.com/2008/12/26/who-else-could-become-a-bank-holding-company/
Kitty // December 28, 2008 at 7:39 pm |
It’s all insiders looking out for their buddies. Once you get past that, it all pretty much makes sense.
woodnsoul // December 28, 2008 at 7:59 pm |
Remember where the present Secretary of the Treasury used to be employed…
He’s just helping 0ut a few of his friends – for free. Doesn’t cost him a nickel.
woodnsoul // December 28, 2008 at 8:02 pm |
Go over to http://robertreich.blogspot.com/ go to the December 24 post and see how all the Wall Street folks are looking at all this.
There was a movie a few years ago where a guy “got mad as hell, and wasn’t going to take it anymore”. when is that going to happen now!!
Is it? Can it?
Hugo // December 28, 2008 at 8:21 pm |
I was kinda wonderin’ when such as you might think to write about these troubles. I reckoned you would do, eventually, and I was right. For what that’s worth.
You done good, Jon.
gon4beer // December 29, 2008 at 5:54 am |
If you bail out GM on the the premise that keeping GM alive is good for America, then you have to bail out GMAC as well. Niether is a good idea-whatever happened to presonal responsibility? Welcome to the new America, comrade.
doug // December 29, 2008 at 6:55 am |
Come on Jon–they have already said that they will give up their stock in Chrysler (and no one would expect them to put more money into that loser)–and why should they be treated any differently then all the other shareholders of financial institutions that have already recieved federal funds?– is it because they are private funds?–or do you just resent the money that they have made in the deals that have worked?
Hugo // December 29, 2008 at 7:36 am |
doug, Jon says (and for what it’s worth, I says too) to let Chrysler bury its dead, but if GM goes down it will hobble Ford terribly, and possibly to the point of topling. That would not be good.
doug // December 29, 2008 at 8:24 am |
Hugo–Jon is talking about Cerberus taking federal handouts while making huge amounts of money–last I checked they have lost 100% of their dumb Chrysler investment and are still in the game on GMAC–which –in my view–should be treated the same as other financial institutions and Cerberus should not be penalized because they are a private company–I don’t really get Jon’s point–
Hugo // December 29, 2008 at 9:03 am |
frankly, doug, where I think we can agree is that we leave the table with our winnings or else without. I know that’s facile, but I mean it. Your point is so well taken: Cerberus made a bet.
woodnsoul // December 29, 2008 at 11:20 am |
Have you written or called your congressional rep about any of this yet and let them know how pissed off you are about the way the bailout is being handled?
If enough folks get really pissed about his and let their congressional reps know it, change WILL happen. If not, then these guys will continue to rip us all off.
JTMcPhee // December 29, 2008 at 6:45 pm |
woodnsoul — do you really believe that congressional reps will do a darn thing about the biggest wealth transfer from the future to the present that has ever happened in history? The people who brought you HR1424, the “Emergency Economic Stabilization Act of 2008,” that 400-plus-page earmark-filthy abdication of Congressional power that gave Paulson and Bernanke the keys to the treasury? The TARP thing that is making rich people even richer?
Does the word “futility” mean anything to you?
Lots of people may get mad, but the taxpayers’ purse, unto the third generation at least, is wide open for every shameless opportunist to dip into. Congresspeople say they are “concerned” and “troubled” that billions are going into the retirement accounts of the people who stole the billions now “disappeared” in the first place. OOOH, and a strong letter will follow!
What you have before you is the greedy of today robbing the needy of tomorrow.
It’s gonna take more than an act of Congress (we already have several, remember?) to “change” this last grasp of our very own incarnation of the Ancien Regime:
http://en.wikipedia.org/wiki/Ancien_R%C3%A9gime_in_France
I know it’s just WikiWords, but my recall of history classes says it’s pretty close to correct. Does any of this sound at all familiar, like what you are looking at in today’s news? Do you know what happened in France in 1786? 1787? 1788? 1789? And after?
http://chnm.gmu.edu/revolution/searchfr.php?function=find&start=1
Of course, the outcome of all THAT change was one Napoleon Buonaparte, and the very model of the modern state.
Careful what you wish for — you may get it.
Jon Taplin // December 29, 2008 at 9:37 pm |
JTM-I think the Ancien Regime notion is pretty true. The battle between the centralizers of administrative authority and the New Federalists may be the crucial marker of our progress towards real democracy.
Rick Turner // December 29, 2008 at 9:56 pm |
JTM, I”m slogging through a book entitled, “Children of the Revolution, the French, 1799-1914″, and what a fucked up century plus! We’d better hope that we’re not going to see that kind of upheaval for that long a time. It took France basically losing their asses in WWI and the Brits and us saving their asses to pull them out, only to have the Germans hit them again just a generation later…and they lost again, only to be saved by, yes, the Brits and us… And are they grateful? Mais non!