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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (44651)	8/4/2010 8:54:24 AM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 71588

Re: "1 - If no one but the government will step to the plate, and if in the absence of the government stepping to the plate the business will fail, than it probably should fail." A reasonable argument that I find myself in philosophical agreement with. Regardless of that agreement though, a collapse would have cost the taxpayers MUCH MORE MONEY (lost tax revenues, unemployment costs for 2 million plus, massive macro economic deleterious impacts, etc., etc.) as the latest economic analysis has clearly established. And, (absent major new money) full collapse was most assuredly in the cards. This would have returned probably around 5 cents on the dollar to the creditors instead of the 40 to 60 cents successful bankruptcy reorganization provided for them. So... philosophically I agree with the premise... but in the down-and-dirty world of we 'are where we are in reality' we as a nation have saved much more money this way. At least, for now. Re: "2 - I disagree that someone had to step up in that status for the business to avoid total failure." (Then you are disagreeing with most every bankruptcy expert - and the presiding judge - who examined the matter.... most all of them believed that ABSENT THE BIG STICK TO KNOCK HEADS TOGETHER and ABSENT the big multi-billion cash injection there would have been NO WAY that GM could have emerged from the process in less than a year and, by then, there would have been not much of value left anyway.) Re: "3 - No one else would step up, partially because the government involvement in the process." That's counter-factual. There was no 'government involvement' (except for the Bush loans), and excepting some jaw-boning efforts, prior to the cash injection while in bankruptcy court. "Also the other creditors wouldn't step up," Because they did not perceive it to be a worthwhile investment for them. That's all. Pure Capitalist decision, no wishy-washy 'higher philosophical' motives. The process was OPEN and injections of private capital were ENCOURAGED by the government, et al. (The government did NOT WANT TO have to be the only backstop.) Re: "4 - Even if it was necessary and beneficial for the government to take this role (and I don't agree that it was) The government could take the role without interfering to the extent it did, or really to any great extent." MONEY TALKS and B-S walks. That is how American bankruptcy law is written. You gain an extra measure of influence over bankruptcy decisions by helping the bankruptcy reorganization become successful by injecting major NEW MONEY. This is encouraged under American law because the results are assumed to be economically beneficial to the nation.

To: TimF who wrote (44651)	8/4/2010 12:13:26 PM
From: DuckTapeSunroof	Respond to of 71588

Ally `Loves' AmeriCredit Deal That Values GM's Former Unit at $30 Billion By David Mildenberg - Bloomberg bloomberg.com Ally Financial Inc., the lender that’s 56 percent owned by the U.S., may stage an initial public offering next year and could be worth as much as $30 billion, according to Chief Executive Officer Michael Carpenter. Ally’s auto unit alone may be valued at $25 billion, based on the $3.5 billion General Motors Co. agreed to pay for subprime car lender AmeriCredit Corp., Carpenter said today during a conference call about second-quarter results. An IPO may be conducted next year if a bid for the entire company doesn’t emerge first, Carpenter said. “I love the AmeriCredit deal because it values our automotive segment alone at $25 billion,” Carpenter said. “I don’t have any doubt about our ability to repay the U.S. Treasury. So I think it’s great.” Ally, formerly known as GMAC Inc., may offer shares to the public after benefiting from $17 billion of U.S. bailouts. Carpenter’s estimate of the market value for Detroit-based Ally exceeds all but six of the biggest U.S. commercial banks, ranking after PNC Financial Services Group Inc. with $32 billion. An IPO “is very clearly within our sights” in 2011, Carpenter said. “The obvious route to repay Treasury is an IPO, unless somebody comes along with a check for $30 billion, based on the AmeriCredit valuation.” IPO Prospects GM and Cerberus Capital Management LP, the New York-based investment firm, also hold stakes. Ally posted its second straight quarterly profit today as the lender rebounded from more than $10 billion of losses last year, which were caused in part by the collapse of U.S. housing and credit markets. “I’m not sanguine about an IPO for Ally,” said Christopher Whalen, managing director of Institutional Risk Analytics, a Torrance, California, firm that evaluates banks for investors. “They still have too many questions to answer.” Carpenter, 63, is refashioning Ally into a lender that serves more companies than just GM, its former parent. GM is planning to buy AmeriCredit to help finance car sales to people with poor credit, and analysts at Gimme Credit LLC said in July that relations between the automaker and Ally have been “prickly” because Carpenter’s firm wouldn’t step up subprime lending. Different Customers “The one question Ally cannot answer right now is, ‘Why does it make sense for GM to continue doing business with them now that they have created a new captive lender?” Whalen said in a telephone interview. “I want to hear about how they’re going to fill out rest of the business model.” Ally said in a slide presentation today that it serves different kinds of subprime customers than AmeriCredit, and Carpenter said there are some risks that his firm isn’t willing to take. Ally will still do all it can to make GM successful, he said. Ally, which adopted the name of its banking unit in May, has expanded to serve Saab Automobile AB and Thor Industries Inc., the biggest maker of recreational vehicles. Net income was $565 million in 2010’s second quarter, compared with a loss of $3.9 billion in the same period a year earlier, Ally said in a statement. All of Ally’s operating segments were profitable, the company said. To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net