May 22 (Bloomberg) -- GMAC LLC received $7.5 billion from the U.S. Treasury to expand auto lending at Chrysler LLC and was cleared to sell government-backed debt for the first time.
The investment includes $4 billion for GMAC to originate loans to Chrysler buyers and sellers, the Treasury said yesterday in a statement. The remaining $3.5 billion will help Detroit-based GMAC meet capital needs that resulted from the government stress tests. The Treasury said it expects to hold a 35.4 percent common equity interest in the company.
The second capital infusion brings the government’s investment in GMAC to $13.5 billion. It signals the Obama administration’s commitment to secure financing for customers and dealers of General Motors Corp. and Chrysler, two of the country’s three biggest automakers. [...]
[My comment: It signals the Obama's administration commitment to bail out at any cost their friends in Cerberus Capital Management, with USD-barer money]
[...] Separately, GMAC can now sell $7.4 billion in debt backed by the Federal Deposit Insurance Corp., the company said in a statement. GMAC also said it received an exemption from the Federal Reserve to allow its bank to originate a limited amount of GM-related retail and wholesale assets.
[My comment: we are back in the far west: no rules, no laws. Government bodies (FDIC and the Fed) allow anything to happen, as long as money is transferred from the USD barer to the private hand of the banksters]
Previously unable to sell debt because of a junk rating, GMAC was permitted to convert into a bank holding company in December to tap the Treasury’s rescue fund and attract more retail deposits. [...]
[My comment: we are back in the far west: no rules, no laws. Government bodies (the Fed) allow anything to happen, as long as money is transferred from the USD barer to the private hand of the banksters]
[...] GMAC’s bonds have jumped 83 percent since the Chrysler deal was signed on optimism the government won’t let the company fail. [...]
[My comment: It signals the Obama's administration commitment to bail out at any cost their friends in Cerberus Capital Management, with USD-barer money]
[...] Senator Richard Shelby, an Alabama Republican, said that continuously pumping money into the automakers and finance companies is delaying recovery in the industry and has been a bad investment for U.S. taxpayers.
[My comment: It signals the Obama's administration commitment to bail out at any cost their friends in Cerberus Capital Management, with USD-barer money]
Some background information is required to understand what is going on here. The central point is a private equity firm named Cerberus and comes from
Wikipedia:
- Cerberus Capital Management, L.P. is one of the largest private equity investment firms in the United States. The firm is based in New York City, and run by 49-year-old financier Steve Feinberg. Former U.S. Vice President Dan Quayle has been a prominent Cerberus spokesperson and runs one of its international units.
- On October 19, 2006, John W. Snow, President George W. Bush's second United States Secretary of the Treasury, was named chairman of Cerberus.
- In 2007, Cerberus and about 100 other investors purchased an 80% stake in Chrysler for $7.4 billion, promising to bolster the auto maker’s performance by operating as an independent company. In 2008, the plan collapsed [...]
- On March 30, 2009, it was announced that Cerberus Capital Management will lose its equity stake and ownership in Chrysler as a condition of the Treasury Department’s bailout deal, but Cerberus will maintain a controlling stake in Chrysler’s financing arm, Chrysler Financial.
- Chrysler Financial refused to take $750 million in TARP government bailout aid because executives didn't want to abide by executive-pay limits, and because the firm doesn't necessarily need the money.[8]
- Cerberus acquired 51 percent of GMAC, General Motors' finance arm, in 2006 for $7.4 billion.
- The company had previously said it may fail in its quest to become a bank holding company because it lacks adequate capital.[15]
- On December 29, 2008, the U.S. Treasury gave GMAC $5 billion from its $700 billion Troubled Asset Relief Program (TARP).
- In January 2009, the Federal Reserve granted GMAC bank holding company status, so it could get access to the bailout money.[17]
So it looks like the well connected and incompetent people of Cerberus managed to get whatever they wanted from the corrupt and incompetent people of the US government. And there will be probably more money to come down the road
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