GM rescue leaves GMAC hanging – Dec. 19, 2008
by Tom on December 23, 2008
in Market Musings
GMAC faces a Friday afternoon deadline that could determine whether it will be able to qualify for bank holding status. If it doesn’t, the company has suggested GMAC could face a bankruptcy filing of its own.
Though GM no longer owns GMAC – it holds 49% of the finance company following a 2006 sale of the rest to Cerberus – a setback at GMAC would deepen the Detroit auto giant’s financial troubles.
GMAC is the biggest lender to GM’s 6,500 dealers nationwide. An analyst at Barclays Capital suggested in a report this week that GMAC’s failure could force GM to come up with $9 billion to $13 billion in additional funding to back its dealers – money GM clearly doesn’t have right now.
GM rescue leaves GMAC hanging – Dec. 19, 2008.
Tom here – do you remember how I wrote earlier this week that I was surprised that the market didn’t react more to the announced “Band Aid?” Well, this is another sign, in my book, that the troubles in the auto industry aren’t done yet….
Stay tuned.
