Three Times a Charm for GM

President Obama’s administration is SO good at resolving our economic calamities that they are now going to TRIPLE-DOWN on GMAC.  According to the LA Times, GM is simply too big to fail, which makes perfect sense as long as Barack continues to throw billions down the rat hole.  Even though the president has told us that he has brought us back from the brink in May, in September, and October, apparently General Motor’s financial division did not get that memo.

A Treasury Department spokesman confirmed that it was in talks with GMAC about a third helping of aid. The government already owns a 35 percent stake in GMAC after providing $12.5 billion to the lender. It also owns a majority-stake in GM and a smaller stake in Chrysler.

Kirk Ludtke, a senior vice president of CRT Capital Group LLC in Stamford, Conn., who follows GMAC, said the automakers can’t succeed without GMAC.  “We continue to believe that a viable GMAC is critical to the success of GM and Chrysler,” Ludtke said.  [This in spite of the fact that GMAC posted a wider second-quarter loss of $3.9 billion].

Treasury’s move would make GMAC the only U.S. company to receive three rounds of bailout aid.

  • Last December, the government gave GMAC $5 billion in exchange for 5 million shares and GMAC’s agreement to extend financing services to bailed-out Chrysler LLC.
  • Then in May, the Treasury Department announced a new $7.5 billion injection for GMAC — short of the $11.5 billion the government’s stress test showed the company would need to stay afloat if the economy worsens.
  • And now, The Wall Street Journal first reported late Tuesday that the U.S. government could hand over another $2.8 billion to $5.6 billion to Detroit-based GMAC.

In less than one year, Barack will sling $15 billion+ into a company that continues to plummet into obscurity.  A wise farmer friend of mine shares the best common-sense advice:  when you find yourself deep in a hole, STOP DIGGING.  But again we are talking about common sense, which is none too common in Washington DC.

via The AP.