The government is getting set to inject more than$7 billion into GMAC, turning the company into a quasi-government agency, according to published reports.
The move is part of an effort to improve its lending capability and to bolster GMAC’s capital base — after having failed a bank “stress test” earlier this month.
Essentially, this massive capital infusion could upset competition in the industry, particularly for Ford Motor Credit Co., which has avoided tapping government funds to date.
Click here for the Wall Street Journal article.
There are several issues that are rarely, if ever, discussed by S&P or any other “NEWS” outlet. All captives have seen a decline in their portfolio performance. Three of the primary reasons stem from (1) layoffs, (2) decreased vehicle values and (3) high gas prices. The current vehicle value vs. projected residual value on leases have caused a huge problem for all of the domestic manufacturers. Combine that with people with “perfect” credit letting their cars go back, due to decreased income, layoffs, high gas prices etc.; and no one is safe from the economic problems that we now face.
FDIC Approves GMAC Financial Services Particpation in TLGP