Tuesday, December 30, 2008

Treasury Gives $6 Billion More to GM

Will the madness ever end?
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.

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.
It is getting stupid now.

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?

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