General Motors (GM) is buying Americredit (ACF) for $3.5 billion. It was two factors that got GM into trouble in 2008. First was its huge foray into consumer lending, particularly subprime lending. Second, were problems with its core auto manufacturing business.
Out of political and social necessity, along came the US Government and bailed out GM and GMAC. GMAC is trying to rebrand itself under the brand name “ally”. GM was supposed to slim itself down, get away from risky financing and get back to making cars that the public wanted to own. Last years “cash for clunkers “ program helped to kick start sales of US made cars.
So, now GM relapses and get deeper into higher risk financing. Where is the outrage? Why is the US Taxpayer, Congress and the White House allowing GM to buy ACF?
It just goes to show you that credit is cheap and in the midst of a major bull market.
At the time of this Blog entry Scott Rothbort, his family and or clients of LakeView Asset Management, LLC owned GMAC debt securities --- although positions can change at any time.
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Posted By Scott Rothbort at July 22, 2010