Stepping into deeper waters to help the auto industry, Treasury Monday night added $6 billion to the $17.4 billion bailout announced Dec. 19, chiefly to help the financial arm of General Motors Corp.It is getting stupid now.
Using financial markets rescue funds, Treasury will purchase $5 billion in senior preferred equity from GMAC LLC, and up to $1 billion more will be lent to GM itself so the automaker can participate in a rights offering at GMAC, which has wanted to reorganize itself as a bank holding company.
GMAC won approval from the Federal Reserve last week to become a bank holding company, but that was contingent on the auto and home loan provider raising at least $30 billion in capital. Treasury’s announcement would appear to move GMAC closer to that goal, and a GM spokeswoman was optimistic Monday night.
How much money can the American taxpayers really give away? Yes, the U.S. government is now part owners of GMAC, but I don't see that as a good thing.
Here is an odd thought--why can the government buy risky, near junk status, stocks in failing companies and that is OK, but won't put a portion of Social Security funds into say better performing stocks?