Financiers, what happened with GMAC today?

[jmshepard]

There was a deadline with GMAC to raise enough capital to qualify as a bank and stake out a teat on the TARP sow by 5:00 pm today. There seems to be a dearth of news regarding what actually happened. Anyone know the status of the maneuvering?

[Mo_Gearhead]

GMAC Debt Exchange Short of 75% Needed to Become Bank
By Caroline Salas

Dec. 18 (Bloomberg) -- GMAC LLC, the auto and home lender trying to rescue itself by becoming a bank holding company, remains short of the 75 percent participation needed for a $38 billion debt swap designed to bolster its capital.

Holders of $16.9 billion, or 58 percent, of eligible GMAC notes and $3.5 billion, or 38 percent, of securities issued by its Residential Capital LLC mortgage unit had tendered by the end of yesterday, GMAC said in a federal filing today. The deadline for early delivery is tomorrow, and Pacific Investment Management Co., one of the biggest holders, may back out of the exchange, Dow Jones reported today.

“We’re disappointed with the follow-through participation through yesterday,” said GMAC spokeswoman Gina Proia, in an interview. “However, we’re hopeful we can still achieve the needed participation to meet the capital requirement by Friday.”

GMAC, the primary lender to General Motors Corp. dealers, sweetened terms of the debt swap last week and has extended the deadline five times since announcing the deal in November. The exchange is part of Detroit-based GMAC’s plan to convert to a bank holding company and gain access to federal bailout programs.

If the exchange isn’t completed by the end of the year, there is a “significant risk” the firm will default on its debt, GMAC said in a filing last month. Analysts have said bankruptcy may follow.

Mark Kiesel, executive vice president at Pimco, declined to comment on his firm’s participation. Pimco, based in Newport Beach, California, manages the world’s biggest bond fund.

GMAC’s $5.5 billion of 6.875 percent bonds due in September 2011 fell 0.5 cent to 45 cents on the dollar at 11:18 a.m. New York time today, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt yields about 43 percent.

To contact the reporter on this story: Caroline Salas in New York at csalas1@bloomberg.net

Last Updated: December 18, 2008 11:45 EST

______________________

I have had a $25K GMAC Bond since 2002 that pays 7.00%. My broker recently warned me they were in trouble. So it goes...

[jmshepard]

Thanks Mo

So, since GMAC finances the dealer's floorplan this could be another bullet that GM cannot dodge. GMAC goes bankrupt and the dealers are left with massive, unsupported debt in their inventories. The dealers fall and pull GM into another bottomless pit.

[jmshepard]

Just watched a TV commercial for the GMAC Bank running on BBC Am during Top Gear.

It looks like GMAC managed to twist enough arms on Friday to qualify as a bank and enjoy the TARP payday.

Bugger.

[tabs]

Actually thank god they were able to do it...one more bullet dodged..

[einreb]

Originally Posted by tabs

Actually thank god they were able to do it...one more bullet dodged..

FYI they have some good CD rates right now (FDIC insured).

[jmshepard]

Fed Grants GMAC Bank Status– Provided GM and Cerberus Piss Off
By Robert Farago
December 24th, 2008 -

Former GM captive finance unit GMAC couldn’t convince enough investors to swap debt for equity to meet the Fed’s standard for a swap to bank status. Mired as it is in the sub-prime mortgage meltdown (not to mention billions in low-interest loans to anyone with a pulse), GMAC was, therefore, headed for Chapter 11. To forestall such an event, the Fed did what comes natural to our August federal institutions these days: they changed the rules. The Wall Street Journal reports that The Fed has granted GMAC bank status, despite its failure to meet the letter of the law. Which the Fed changed. “As part of the approval, the Fed is requiring GM and Cerberus Capital Management LP to reduce their ownership stakes in Detroit-based GMAC. GM must reduce its ownership interest in GMAC to less than 10% in voting shares and total equity. Cerberus, which owns Chrysler, must reduce its interest to a maximum of 14.9% in voting shares and 33% in total equity.” And that ain’t all. Reading the fine print of the Fed’s statement is most revealing…


“In light of the unusual and exigent circumstances affecting the financial markets, and all other facts and circumstances, the Board has determined that emergency conditions exist that justify expeditious action on this proposal in accordance with the provisions of the BHC Act and the Board’s regulations… the Board has also waived public notice of this proposal.”

So, quick and dirty it is. Apparently, I’m not the only one who thinks this thing smells, as noted in the footnote:

“A commenter requested that the Board hold a public meeting or hearing on the proposal. Section 3(b) of the BHC Act does not require the Board to hold a public hearing on an application unless the appropriate supervisory authority for the bank to be acquired makes a timely written recommendation of denial of the application. The Board has not received such a recommendation from the appropriate supervisory authorities.”

Accountability. What happened to it?

http://www.thetruthaboutcars.com/feds-grant-gmac-bank-status-gm-and-cerberus-must-piss-off/#more-197372

[Porsche-O-Phile]

They'll be sucking on the TARP taxpayer teat in no time. I'm buying some GM stock Friday.

[competentone]

Originally Posted by Porsche-O-Phile

They'll be sucking on the TARP taxpayer teat in no time. I'm buying some GM stock Friday.

Don't do that.

The debt holders and management/employees are the only ones being bailed out at GM.

The common shareholders will get nothing.

After the government handouts don't save the company, GM will go into Chapter 11; the common will be wiped out.

Trade the stock if you want, but understand that you are playing "the greater fool" game. If you don't find a "greater fool" to buy your stock at a higher price, you will lose money.