Bankrupt GM uses $3.5 billion of taxpayers’ money to buy subprime auto lender AmeriCredit and signal a return to the good old days for Wall Street
One obvious consequence of “sweeping” legislation is that nothing gets done while we wait for it to pass and go into effect. Now that it has passed, we will probably start to see a lot more activity in previously dead areas. Perceived uncertainty and the volatility of government actions has been reduced. As the various implementation periods in the bill roll off over the next 6-9 months, uncertainty will further diminish, which will lead to more activity.
Doubtless there will be further evidence of “unintended consequences” too.
Anyhow, a second big piece of post Dodd-Frank Act news (after the boycott by the rating agencies) is that GM is back – making deals and (umm, once that boycott by the ratings agencies is worked around, negotiated away, or whatever) securitizing.
GM, still currently in bankruptcy, is spending $3.5 billion of money it presumably doesn’t have to buy a subprime lender, AmeriCredit.
AmeriCredit is a subprime auto lender dependent entirely on the securitization market for its existence; it’s flirted with bankruptcy a few times itself, over the years (hat tip: anonymous). At the moment it finances almost exclusively secondhand cars, any make.
GM needs a subprime lender so they can get someone to make loans to their potential buyers, otherwise GM won’t be able to sell so many cars, which would spoil GM’s planned IPO (which the administration and Geithner will be hailing as evidence of their successful plans, in time for the elections).
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nakedcapitalism.com
I think this says something about who they expect to be buying GM cars. |
