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Tim Geithner, Don't You Dare Bail Out GMAC Again
Posted Oct 28, 2009 10:12am EDT by Henry Blodget in Investing, Newsmakers, Recession, Banking
From The Business Insider, Oct. 28, 2009:
Tim Geithner's getting ready to shovel more taxpayer money down the rat hole, this time to GMAC.
GMAC, in case you're in understandable denial, has been bailed out twice already.
And now Tim Geithner wants to shovel another $2.8 billion in.
What is the US taxpayer getting in exchange for all these GMAC bailouts?
Preferred stock.
Why are we getting preferred stock, which is neither a claim on the future upside of the company's equity, nor a senior debt security that will be completely repaid in the event that taxpayers finally get mad as hell and won't take it anymore?
Because Tim Geithner is worried that if he makes the folks who voluntarily lent money to GMAC -- the bondholders -- lose so much as a cent, the entire US economy will collapse.
If Tim Geithner feels it is absolutely critical that he shovel more taxpayer money into this paper-shredder or else even fewer people will buy "the new GM"'s cars, or if Tim Geithner concludes that now that he has already put so much taxpayer money on the line that he has to keep shoveling good money after bad to postpone the inevitable until after he has taken his job at Goldman Sachs, then there is presumably nothing that anyone will be able to do to stop him. Tim Geithner developed his bail-out-everyone strategy two years ago, before he even took over Treasury, and he'll presumably be damned if he's going to modify that strategy now.
But if we raise enough of a fuss, maybe we can force Tim to reconsider the terms so we don't get completely screwed again.
Instead of a preferred security, which is subordinate to all GMAC debt, we want a SENIOR BOND. A bond that will be paid off FIRST in the event that Tim finally gets the boot and GMAC collapses.
We also want a big helping of WARRANTS to compensate us for the risk we're taking. In addition to interest, we deserve upside--the same upside that any private-market savior would demand.
How about it, Tim?
Please?
More coverage from The Business Insider:
210 Comments
hadenoughgov - Wednesday October 28, 2009 10:20AM EDT
YOU HAVE TO BE F-- ING JOKING WHAT THE HELL IS GOING ON IN WASH. D.C MY GOD TIME FOR REVOLUTION!!!!!
JoeB - Wednesday October 28, 2009 10:22AM EDT
Nothing will change. Print print print. It's no different than throwing more money at a falling stock to offeset losses on the way back up (if it goes that way)
Terry - Wednesday October 28, 2009 10:22AM EDT
The one word answer to the question, "What is the US taxpayer getting in exchange for all these GMAC bailouts?" SCREWED
Yahoo! Finance User - Wednesday October 28, 2009 10:23AM EDT
The whole system is a sham. Getting gov'ts and thereby the people indebted to the Banking system is what the bankers want. It is insidious in nature. This is what can be referred to as covert slavery of the masses.
Art - Wednesday October 28, 2009 10:23AM EDT
Who are the good old boys holding GMAC bonds and how much did they contribute to the Democrats?
Terry - Wednesday October 28, 2009 10:24AM EDT
The one word answer to the question, "What is the US taxpayer getting in exchange for all these GMAC bailouts?" SCREWED //////////////////////////////////////////////////////////////////////////////////////////////////////////////// No Senator should be in office more than 2 terms (12 years) and no Congressmen/women should be in office more than 3 terms (6 years) otherwise they do too much harm to us all. VOTE OUT the INCUMBENTS in 2010.
Yahoo! Finance User - Wednesday October 28, 2009 10:25AM EDT
Close your BofA credit card accounts or pay for their bonus
Yahoo! Finance User - Wednesday October 28, 2009 10:25AM EDT
Geithner is the anti-Christ.
Yahoo! Finance User - Wednesday October 28, 2009 10:26AM EDT
Vote incumbents out of office or don't complain
__A_YAHOO_USER__ - Wednesday October 28, 2009 10:26AM EDT
Won't happen. This type of action requires spine, and so far, Timmy's proven to be a snake.
LegalizeMe - Wednesday October 28, 2009 10:27AM EDT
Oh how would we ever get along if the big bad government wasn't always saving us?! Somewhere better, that's where.
san - Wednesday October 28, 2009 10:31AM EDT
The shouldn't call them zombie busineses but leech or vampire businesses. Let me suck yar blood! hu hu hu! :D
Yahoo! Finance User - Wednesday October 28, 2009 10:31AM EDT
When are people going to stop this crap?
Yahoo! Finance User - Wednesday October 28, 2009 10:32AM EDT
85 BLN heist of WAMU conducted by corporate thug aka Jamie Demon and Corrupt / inept regulator Sheila Bear and OTS chief JOhn Reich of OTS to defraud millions of Wamu investors!!! A well capitalized bank was a victim of corruption and deceit. 300+ BLN deposits 20+ bln valued Credit card business 10+ bln of commercial lending business Trillions of $ Mtg servicing rights and business 3000+ branch network and other real estate assets were stolen from WAMU Investors by a coordinated fraud by Treasury/FDIC/OTS and the greatest wallstreet Crook and Thief JAMIE DEMON. Millions of shareholders life savings were lost, children's education were ruined and retirement incomes evaporated by their fraudualent conveyance!!! This is the largest heist in human history conducted by the greatest theif of WALL STREET JAMIE DEMON!!!
__A_YAHOO_USER__ - Wednesday October 28, 2009 10:34AM EDT
You people are surprised? Spare me...
Dennybro - Wednesday October 28, 2009 10:35AM EDT
YOU GO TERRY_WE NEED CHANGE WE CAN BELEIVE IN!!!!
Felix S - Wednesday October 28, 2009 10:39AM EDT
Terry, I agree with you. We need a third party, we just seem to switch back and forth for no real changes. Ron Paul was a hope of change......Independents better get together!
Steve - Wednesday October 28, 2009 10:39AM EDT
Survival of the fittest! Let GMAC fail... if they need to raise a little capital, here's and idea... Let me buy out my lease on my Suburban for the residual value. Instant cash flow... Better than the cash for clunkers!
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Yahoo! Finance User - Wednesday October 28, 2009 10:19AM EDT
More proof that the ice we are skating on is very very thin......