Sunday, July 25, 2010

Wait a Minute, What? (again)

As the nation headed into the weekend after dealing with a racial blow-up and a tropical storm disaster that wasn't, Government Motors slipped out a press release:
General Motors’ acquisition of AmeriCredit for $3.5 billion will help consumers with tarnished credit get loans, give dealers another borrowing option for their inventory and strengthen GM’s public stock offering, say people impacted by the proposed deal.

GM CEO Ed Whitacre said he expects the purchase to close by the end of this year.
You might ask how the hell GM can buy anything? Recall just a few months ago that Roger Whitacre, the GM CEO, came out in print and was featured on a commercial deceptively bragging that GM had already repaid their bailout loans well ahead of time, which wasn't true. Now this story tells us..
GM, which had $23.3 billion in cash as of March 31, plans to pay $24.50 in cash for each AmeriCredit share, a 24% premium over its Wednesday closing price of $19.70.
So, is that 23 billion earned profits or part of the government line of credit? If the former, quite an amazing feat during the lingering Bush depression. If the latter, yet another deceptive article about GM's finances.

So where are they going with this?
But it’s enough to put GM back in the hunt for consumers whose credit scores have taken a hit from unemployment, medical bills or even foreclosure.
In other words, high risk customers. Those who wouldn't otherwise qualify for a car loan. Sure, the other car companies are doing it too, but GM is taxpayer-union owned and backed. So basically it seems we have a taxpayer/union owned government-backed entity buying a financial instrument (most likely with bailout money) that can serve high risk people who probably pay nothing in taxes. Come and get your car?

As with the last round of deception, Senator Grassley is all over this one, too:
“If GM has $3.5 billion in cash to buy a financial institution, it seems like it should have paid back taxpayers first. After GM’s experience with GMAC, which left GM seeking a taxpayer bailout, you have to think the company and, in turn, the taxpayers would be better off if GM focused on making cars that people want to buy and stayed clear of repeating its effort to make high-risk car loans.”
But Grassley is a Senator. Here's a comment from the grassroots--a car dealer (one of the ones Obama didn't needlessly fire):
“The question is how much sub-prime do we want to stimulate?” said Frank Ursomarso, a Buick-GMC dealer in Wilmington, Dela. “Because that’s what caused the problem to begin with.”
Yeah, one would think. But further thinking leads one to think this sounds more like a new definition of corporate welfare.


LASunsett said...

They desperately wnat/need to stimulate the economy before November. Problem is, they are too stupid to know how to do it the right way.

Damn the torpedoes, full speed ahead.

A.C. McCloud said...

Only the Lord knows what stunts they might pull between now and November. Any group that lives via 'ends justify means' are capable of anything, and Biden is just stupid enough to blab (he recently said the Dems would surprise everyone).