GM Buys Subprime Lender – shit gets weird
So… ever since splitting out GMAC (now Ally bank.. after getting bailed out itself and sucking down a few billion), GM has been without a lending arm. They approached Ally, but Ally wanted not a goddamn thing to do with them and their subprime lending. Which is troublesome for the company, because its dealers have had to use third party banks when financing new car sales. The trouble with those third party banks is that they don’t like lending to subprime borrowers. I don’t really know why they don’t like subprime borrowers, it’s not like there has ever been an issue with defaults on subprime debt. Statistically subprime borrowers are hale and hearty investments. For instance in the US housing market… well I mean look at Greece and developing countries… aww shit.
Anyway, Obama/GM/The Czarina of Autos decides that it needs a new lending arm so that it can it can create a new asset bubble by offering below-cost loans to borrowers who should be buying used Volvos, and are highly likely to default. But this is a good thing, as it serves an honorable public service.. of making sure that people who don’t have the money can drive new cars… wait.. that does not make a damn bit of sense. Why the fuck don’t they just buy a nice sensible used car and save their money. This is not even as justified as a house fergodssake – the thing depreciates like mad as soon as you buy it.
To serve this greater good of asset destruction, GM looked around to find a profitable lender which would be a good fit with its business model and allow aggressive expansion and growth as GM seeks to roll out new models and regain the confidence of the buying public. It then used its cash reserves and publicly traded stock to make a reasonable but aggressive offer. No wait, that’s not the story at all, got confused, forgot I was living in Atlas Shrugged for a minute there.
What really happened is the US government had one of its companies, GM, buy a sketchy and failed subprime lender AmeriCredit which had been bailed out and is now 61% owned by the Treasury. GM is paying a 25% premium over the AmeriCredit share price… but GM has no damn shares and all its money is from taxpayers.. so this is one branch of the government buying another branch of the government SO THAT THEY CAN GO BACK TO SUBPRIME LENDING. AAARRRRGGGG.
WTF
Seriously WTF
I could not make this shit up. Two govt. owned companies which failed because of the lending crises are getting together because they need to be able to offer subprime loans to people who any reasonable company would not lend to. Yeah, that makes a whole fucking lot of sense. I don’t know why the government even bothers with the pretense of saying that GM “bought” AmeriCredit when they are both owned by the government.
Anyway, Obama/GM/The Czarina of Autos decides that it needs a new lending arm so that it can it can create a new asset bubble by offering below-cost loans to borrowers who should be buying used Volvos, and are highly likely to default. But this is a good thing, as it serves an honorable public service.. of making sure that people who don’t have the money can drive new cars… wait.. that does not make a damn bit of sense. Why the fuck don’t they just buy a nice sensible used car and save their money. This is not even as justified as a house fergodssake – the thing depreciates like mad as soon as you buy it.
To serve this greater good of asset destruction, GM looked around to find a profitable lender which would be a good fit with its business model and allow aggressive expansion and growth as GM seeks to roll out new models and regain the confidence of the buying public. It then used its cash reserves and publicly traded stock to make a reasonable but aggressive offer. No wait, that’s not the story at all, got confused, forgot I was living in Atlas Shrugged for a minute there.
What really happened is the US government had one of its companies, GM, buy a sketchy and failed subprime lender AmeriCredit which had been bailed out and is now 61% owned by the Treasury. GM is paying a 25% premium over the AmeriCredit share price… but GM has no damn shares and all its money is from taxpayers.. so this is one branch of the government buying another branch of the government SO THAT THEY CAN GO BACK TO SUBPRIME LENDING. AAARRRRGGGG.
WTF
Seriously WTF
I could not make this shit up. Two govt. owned companies which failed because of the lending crises are getting together because they need to be able to offer subprime loans to people who any reasonable company would not lend to. Yeah, that makes a whole fucking lot of sense. I don’t know why the government even bothers with the pretense of saying that GM “bought” AmeriCredit when they are both owned by the government.
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