Your Distressed Property and Short Sale Expert in Maryland
Just before the sub-prime/foreclosure crisis changed out world in 2006, GM was able to sell 51% of GMAC to Cerebrus, and partners, considered a smart Wall Street investment house(also large), for $7.2 Billion.
Not long after that, in late 2008, GMAC ran out of cash and the ability to borrow additional funds because it's sub-prime lending business turned into a disaster.
At this point the US Treasury "bailed out" GMAC - several times. However, GMAC was never placed into bancruptcy, like their former parent, General Motors, was. Treasury felt they needed to prevent the loss of GMAC because they provide the "floor plan" financing for 75% of GM auto dealers, and if their financing vanished, so would the auto dealers and GM.
Therefore, the stock owned by GM and Cerebrus did not get wiped out, and now are still quite valuable, although not what they once were.
Now Cerebrus's investment is worth about $6 Billion, while GM's investment is worth about $1.2 Billion. Cerebrus did contribute $750 Million to the bailout, and their investment is probably secure, but should GM, owned by US taxpayers, reap a "freebie"? Or should that stake revert to US Taxpayers vis the Treasury? That's what I would vote for!
The money GM used to recapitalize GMAC in 2008 came from funds received from Treasury, therefore, the US should have ownership of that portion of GMAC(Ally Financial) and sell it when prudent to do so.
Just my humble opinion...
Dennis
www.MarylandDistressedProperties.com
www.Frederick-MontgomeryCountyHomes.com
Comments(0)