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Federal officials also are moving to shore up GMAC's ability to fund its daily operations, with the Federal Deposit Insurance Corp. telling the company Tuesday the agency will guarantee an additional $2.9 billion in debt, according to people familiar with the discussions.
No surprise here. It's another finance company that should have been shut down. BTW if anyone has noticed, this is Ally Bank in regards to the retail face they are putting forth these days.
Ahh... so thats who Ally Bank was... I was wondering why a relatively unknown bank put up great interest rates... should of known the government was fronting the backup money... I was going to open an account with them but decided against it... now I am glad I didn't... GMAC is a waste of money and time but as long as they got their hands on taxpayer money... its "free" money after all... wish I could have some free taxpayer money as collateral for my investments... if I make money, I win... If I lose, then you lose money and I lose nothing... what kind of business model is the White House making these days...
if I make money, I win... If I lose, then you lose money and I lose nothing... what kind of business model is the White House making these days...
These days? In the past 15 years there have been 6 large bank bailouts. I had a history of all the government bailouts but don't have the book on me now, one was Amtrak. This has been going on for decades.
A true FDIC insurance corp would charge banks different rates based on risks; however the way our FDIC is set up all banks pay the same so it doesn't pay to be conservative.
To help GMAC raise the remaining capital, the Federal Deposit Insurance Corp. took the rare step of allowing the junk-rated company to gain access to its debt guarantee program. GMAC will be allowed to issue as much as $7.4 BILLION in FDIC-backed debt. The FDIC guarantees the debt that GMAC would issue in case the company defaults on payment.
this guarantee is with full knowledge of widening losses from one year ago...(GMAC Financial Services, which provides both automotive and home loans, said Tuesday it posted a wider second-quarter loss of $3.9 billion as it transformed from an arm of General Motors Co. into an independent bank. In the year-ago period, the company posted a loss of $2.48 billion.
Revenue during the quarter fell 28 percent to $1.27 billion from $1.76 billion.) YIKES!
The Federal Reserve also waived rules to give GMAC's new bank, called Ally Bank, more leeway to make loans to GM customers.
Ally Bank had assets of $42.5 billion at the end of the quarter, up from $36.4 billion at the end of the first quarter, the only comparable quarter. Ally received $25.4 billion in deposits in the quarter, including $14.5 billion in retail deposits as the company heavily marketed its new bank status.
Ahh... so thats who Ally Bank was... I was wondering why a relatively unknown bank put up great interest rates... should of known the government was fronting the backup money... I was going to open an account with them but decided against it... now I am glad I didn't... GMAC is a waste of money and time but as long as they got their hands on taxpayer money... its "free" money after all... wish I could have some free taxpayer money as collateral for my investments... if I make money, I win... If I lose, then you lose money and I lose nothing... what kind of business model is the White House making these days...
it is getting ridiculous with the government playing favorites...
GMAC is the former captive finance company for General Motors. GMAC converted itself to a bank holding company late last year, as part of a restructuring to win a bailout from the U.S. Treasury Department.
GMAC already had a small retail banking operation, but on May 15, GMAC launched a much higher-profile online bank aimed at consumers called Ally Bank, based in Charlotte, N.C.
In late May, the Washington-based American Bankers Association complained to the FDIC that Ally Bank isn’t playing fair by paying above-market rates on CDs and savings accounts.
“ABA believes it is completely inappropriate, and indeed risky, for GMAC/Ally Bank to be allowed by the regulators to continue to pay rates well above the market,” ABA President and CEO Ed Yingling said in a statement posted in an ABA newsletter.
He said that Ally Bank shouldn’t be allowed to pay such high rates because GMAC is losing money. He said under the circumstances it’s “risky” for Ally to pay among the highest rates in the country, and that normally, federal regulators wouldn’t allow other banks to do the same thing.
Yingling also hinted that Ally also has an unfair advantage because of $13.5 billion in government assistance GMAC has received from the U.S. Treasury Department. (bnet)
GMAC's defense was that they are "well capitalized". if that is true, why are they asking for a handout ?
Last edited by floridasandy; 10-28-2009 at 07:07 AM..
as a side note, ally bank was one of the sponsors to pull their advertising from the glenn beck show. it seems that the major corporations with ties to government did the pulling:
According to news sources, some companies did pull their ads — Allergan (maker of Restasis), Ally Bank (a unit of GMAC Financial Services), Best Buy, Broadview Security (formerly Brinks), CVS, GEICO Insurance, Healthy Choice (a division of ConAgra Foods), the advertising service Lawyers.com (run by LexisNexis, a division of Reed Elsevier Inc. and misspelled Nexus Lexis in news reports), Men’s Wearhouse, Procter & Gamble, Progressive Insurance, RadioShack, Re-Bath, Roche, Sanofi-Aventis (Plavix), Sargento Foods, SC Johnson, State Farm Insurance, Travelocity, Wal-Mart.
These days? In the past 15 years there have been 6 large bank bailouts. I had a history of all the government bailouts but don't have the book on me now, one was Amtrak. This has been going on for decades.
A true FDIC insurance corp would charge banks different rates based on risks; however the way our FDIC is set up all banks pay the same so it doesn't pay to be conservative.
Your right its been going on for a long, long while... I be willing to bet its gone on longer than 15 years... You can thank Biden for the Amtrak, personally, I would of made the people who uses Amtrak to pay a fair share to keep it operational rather than someone who has no access to Amtrak to subsidize their cost (albeit I think Amtrak workers are way overpaid and have way too good benefits - probably from taxpayer funding)...
Its true that FDIC is doing a lousy job of funding but I don't think its an accident it was set up that way... its what happens when corporations become the political power and politicians become their PR...
Buying up the bad debt of privileged institutions and dumping worthless assets on the American people is morally wrong and economically futile.” - Representative from Texas, Ron Paul
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