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GMAC Bailout May Cost Taxpayers $6.3B

From the Associated Press:

Watchdog: GMAC bailout could cost taxpayers $6.3B

By DANIEL WAGNER (AP) – 8 hours ago

WASHINGTON — The Treasury Department sank billions into auto finance giant GMAC Inc. without an exit strategy or proof the company was viable — a decision that could cost taxpayers $6.3 billion, a new watchdog report says.

The government said the $17.2 billion bailout was a necessary step to save troubled automakers General Motors and Chrysler. GMAC provides critical financing to auto dealers, who borrow to finance their fleets until the cars can be sold to consumers.

Yet GMAC faced far fewer conditions than the bailed-out automakers, the report says. When the automakers were rescued, they were forced into bankruptcy. Shareholders lost their investments, creditors took a hit and executives were forced to detail plans for making the companies viable.

GMAC was treated more like banks that received bailouts without having to explain what they were doing with the money, the report says.

The report was released Thursday by the Congressional Oversight Panel overseeing the $700 billion financial bailout that Congress passed in October 2008.

"Treasury missed many opportunities to improve accountability and protect taxpayer money," panel chair Elizabeth Warren said in a conference call with reporters. She said Treasury didn’t make GMAC show how it would return the taxpayer money, or how the investment would increase credit to consumers.

"These decisions mean that Treasury is now struggling to deal with a GMAC that is not financially rehabilitated, Treasury has no exit strategy and taxpayers are not fully protected," Warren said

The watchdog report, however, calls GMAC’s three-part bailout "one of the more baffling decisions made" to stabilize the financial sector. It says there was no evidence that GMAC’s failure would upend the financial system, or that it was "too big to fail."

Lest we forget, the GMAC bail-out — just like the General Motors and Chrysler bailouts – are the brainchildren of Mr. Obama and the Democrats.

Those hated bank bailouts that Bush initiated have been almost entirely paid back at a profit to the taxpayer.

But the GMAC and automakers bailouts are going to cost the taxpayers billions of dollars.

What a coincidence.

This article was posted by Steve Gilbert on Thursday, March 11th, 2010. Comments are currently closed.

3 Responses to “GMAC Bailout May Cost Taxpayers $6.3B”

  1. Right of the People

    As long as the unions get their bucks, that’s all that matters.

  2. proreason

    no biggee, heh heh.

    As one of only 75 million taxpayers in the country, this has only cost you $80 so far. Unless you make earn more than average. For those, it probably only cost a thousand or so. Not counting interest, or future bailouts, or the hidden kick-backs we don’t know about, or future tax rate increases.

    Isn’t that a small price to pay to help your UAW friends?

  3. Rusty Shackleford

    Yet GMAC faced far fewer conditions than the bailed-out automakers, the report says. When the automakers were rescued, they were forced into bankruptcy. Shareholders lost their investments, creditors took a hit and executives were forced to detail plans for making the companies viable.

    Yup, everyone with “skin in the game” lost their shirts while the unions trundled merrily on their way and suffered not. However, my uptake is that the REST of the story is…not YET.

    They will suffer. And suffer big. Better a feast today than a slice of bread tomorrow.




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