Can GMAC Save GM?
GM and Chrysler aren’t just two troubled auto companies. They are also linked by GMAC, a financial company which used to be wholly-owned by GM and which is now 51% owned by Cerberus, which also owns Chrysler. GMAC has now applied to become a bank holding company (it owns a small bank) — with the obvious intention of asking Treasury for TARP funds. And just to complicate matters, GMAC owns ResCap, a troubled subprime mortgage lender. As John Carney said this morning, this is clearly an attempt to procure a GM bailout by the back door. Will it work? I decided to ask Carney, via IM. Felix Salmon: So what on earth is going on with GMAC? If GMAC owns a bank, and GM owns a minority stake in GMAC, is that all that’s needed to get TARP funds all the way up to GM? And is there any way that those TARP funds can make their way up to GMAC’s majority owner, Cerberus, and thence back down to Chrysler? John Carney: Every operating company should buy a small bank if it’s allowed to do that. Felix Sal
