Re: Freddie, Fannie and you.



F. George McDuffee wrote:

On Mon, 8 Sep 2008 01:06:47 -0400, "vinny" <vinny@xxxxxxxxxxxxxx>
wrote:


How about gmac offering 1 year cd's at almost 5%?
Wtf is that about? The national average is only 2%. And it's not like they can get 5% on any investments, so are they intentionally taking a loss?
GM is bankrupt...yet they can still give money away?
wtf is going on?

==========
In this case the tax payer is on the hook through the FDIC as
GMAC also owns a "bank." Given that both GMC and Cerberus
[co-owners of GMAC] don't have any capital invested [they did,
but its long gone] and the taxpayers will pick up the bill, they
can offer 5% CDs and make high interest / high risk consumer
loans [e.g. credit card debt at 36% per year] If things go well
they can "double down" and "get even," and if things go as
expected, the FDIC/taxpayers take the loss. This is a major
reason why the regulators demand a minimum ratio of owners'
equity to debt [loan reserves] to insure the owners have some
"skin in the game." FWIW -- this appears to have been a major
contributing factor in the S&L disaster.

Another example of a financial vampire: dead, but sucking the
blood from the living to stay animated.... To see the GMAC bank click on
http://www.gmacbank.com/index.html

Now where did I put that garlic???



And the corporate execs that put these institutions walk away with a pile of cash and pensions. The did some of their contract flimflaming as late as July of this year, about 25 million in bennies in addition to some other perks.

John

.

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