• Please be sure to read the rules and adhere to them. Some banned members have complained that they are not spammers. But they spammed us. Some even tried to redirect our members to other forums. Duh. Be smart. Read the rules and adhere to them and we will all get along just fine. Cheers. :beer: Link to the rules: https://www.forumsforums.com/threads/forum-rules-info.2974/

To big to fail, GM enters "high risk" loan business alongside Fannie & Freddie

Melensdad

Jerk in a Hawaiian Shirt & SNOWCAT Moderator
Staff member
GOLD Site Supporter
To big to fail, GM enters "high risk" loan business alongside Fannie & Freddie

Below is a small portion of an interesting article about business.

People don't really want to buy GM's cars so now GM is, through its credit division, offering leases and loans to people who have questionable credit and would not otherwise be able to obtain credit from traditional lending sources.

This is, at best, a questionable business practice. Fannie May and Freddie Mac did this with home mortgages, as mandated by the Clinton era directives under the Community Reinvestment Act, which was supercharged and pushed under his tenure, leading to the housing collapse a few years ago. Cars don't last as long as homes, its likely the consequences would be similarly dire.

For the complete article see link => http://www.weeklystandard.com/blogs/gm-joins-fannie-and-freddie
GM Joins Fannie and Freddie
The opportunity to pursue private profits backstopped by an implicit government guarantee is an invitation to take on excessive risk.


BY CHRISTOPHER PAPAGIANIS
August 13, 2010 4:30 PM

Andrew Ross Sorkin has a very interesting column this week examining the signal sent by GM’s purchase of AmeriCredit. The short answer: GM looks like it’s trying to revive the old patterns of demand before the recession. It’s doing so by following some of the same business practices that led to its bankruptcy filing last summer. . .

According to Sorkin, “G.M. plans to prod sales of its vehicles by using AmeriCredit to extend loans and leases to automobile customers with questionable credit. These are the same customers who could very well be denied a loan by other lenders. But prudent lending is not at the top of G.M.’s to-do list: it needs to move its vehicles off the lot and it needs to do so quickly.”

Sorkin asks the right question: “did we really spend $50 billion of our money just to revive the kinds of practices that led to the credit crisis?”

On the upside, a successful deal for GM’s auto financing arm could help the taxpayer. Since the government still owns 61 percent of GM, a successful I.P.O. is vital if U.S. taxpayers are going to get back at least a portion of the money that was invested in the firm over the last two years. On the downside, a GM that increasingly depends on more risky loans (through AmeriCredit) may come at the cost of a long-term recovery. Is GM heading down the same path that ultimately led to a government take-over?
 
D

darroll

Guest
Re: To big to fail, GM enters "high risk" loan business alongside Fannie & Freddie

This country never learns.
You can still buy a house with no money or no job.

$hit man.
 

thcri

Gone But Not Forgotten
Re: To big to fail, GM enters "high risk" loan business alongside Fannie & Freddie

I thought they posted a major profit for the second quarter of this year. :confused2: Or didn't they really have a profit?
 

Big Dog

Large Member
Staff member
GOLD Site Supporter
Re: To big to fail, GM enters "high risk" loan business alongside Fannie & Freddie

It's OK, cars are a more affordable bailout ................ :sad:
 

waybomb

Well-known member
GOLD Site Supporter
Re: To big to fail, GM enters "high risk" loan business alongside Fannie & Freddie

Great. Now Benton Harbor will have their $5,000 houses with New Escalades parked out in front. Everyone will have one. what a wonderful plan; if everybody has one, there's no reason to steal one, so the crime rate in BH nose dives! Great Plan!.
 

joec

New member
GOLD Site Supporter
Re: To big to fail, GM enters "high risk" loan business alongside Fannie & Freddie

I wonder how many here ever had a lone with GM finance before. Well I have several times and they have fairly strict policies on down payment and finance charges.
 

thcri

Gone But Not Forgotten
Re: To big to fail, GM enters "high risk" loan business alongside Fannie & Freddie

I wonder how many here ever had a lone with GM finance before. Well I have several times and they have fairly strict policies on down payment and finance charges.

Joec


Was that before or after Government control?

Oh and I am going to pull a Gatorboy moment here. Loan is spelled Loan not lone. :poke: well some has to play Gator, he hasn't been around in a while.
 

joec

New member
GOLD Site Supporter
Re: To big to fail, GM enters "high risk" loan business alongside Fannie & Freddie

Not a problem on the Loan spelling correction. At any rate not it was before the government bailed them out. Oh and I consider the car industry bail out that pretty much. Now if you honestly look at the car industry in this country I hardly think any right minded person would want to be dependent there on imports only. GM on the other hand is and consider why Ford went to help GM get the government help as they didn't need it. Had they gone out about 3 Million more jobs would of been lost in the parts area. This would of brought down Ford as well as all other foreign cars being produced in the US.
 

thcri

Gone But Not Forgotten
Re: To big to fail, GM enters "high risk" loan business alongside Fannie & Freddie

Based on my experience with GM Financing they have gotten tougher. This was before the bailout and because of their toughness we don't do business with GM Finance any more. Has it changed since the bailout. However my neighbor who sells GM called me and told to check as they have lightened things up. Not enough for me to buy though.
 

Snowtrac Nome

member formerly known as dds
GOLD Site Supporter
Re: To big to fail, GM enters "high risk" loan business alongside Fannie & Freddie

Based on my experience with GM Financing they have gotten tougher. This was before the bailout and because of their toughness we don't do business with GM Finance any more. Has it changed since the bailout. However my neighbor who sells GM called me and told to check as they have lightened things up. Not enough for me to buy though.
several independent uesed car dealer franchises have done well with the high risk loans they have a dedicated staff to collect weekly payments they don't wait for you to come in you get called on the date due you also don't pick the suv you want if your credit risk is high you get a stripped down rolerscate so they don't loose much when you default i see the gm program being the same way and brobama pushing it to put new cars on he road that get better gas milage and polute less.
 

Melensdad

Jerk in a Hawaiian Shirt & SNOWCAT Moderator
Staff member
GOLD Site Supporter
Re: To big to fail, GM enters "high risk" loan business alongside Fannie & Freddie

I wonder how many here ever had a lone with GM finance before. Well I have several times and they have fairly strict policies on down payment and finance charges.

GM finance that you had a loan with is no longer in business. That was the GMAC company and it was closed down.

This is a newly purchased financing company and the specific intent, if you carefully read the article, is to offer loans to people who cannot qualify for traditional loans.




. . .GM get the government help as they didn't need it. Had they gone out about 3 Million more jobs would of been lost in the parts area. This would of brought down Ford as well as all other foreign cars being produced in the US.

First, I see no evidence that 3 million more jobs would have been lost. There were buyers who were standing in line to purchase the assets from bankruptcy. They would have kept most of the workers working.

And exactly how would it have brought down Ford?

We have plenty of other car companies here in the US, all building cars, Mercedes, Toyota, Honda, Subaru, etc would they have also been brought down?
 

Melensdad

Jerk in a Hawaiian Shirt & SNOWCAT Moderator
Staff member
GOLD Site Supporter
Re: To big to fail, GM enters "high risk" loan business alongside Fannie & Freddie

several independent uesed car dealer franchises have done well with the high risk loans they have a dedicated staff to collect weekly payments they don't wait for you to come in you get called on the date due you also don't pick the suv you want if your credit risk is high you get a stripped down rolerscate so they don't loose much when you default i see the gm program being the same way and brobama pushing it to put new cars on he road that get better gas milage and polute less.

Ahh, but do you honestly think that, on a national level, the laws would permit a national lender to do this?

And do you actually think that GM is going to do this with lower profit new cars? Used cars actually have a pretty high profit margin if the dealer can move them, they can build in profits that cannot be added on to a new car price.

Your example is a great one of how small adaptive companies can beat out large organizations.
 

Snowtrac Nome

member formerly known as dds
GOLD Site Supporter
Re: To big to fail, GM enters "high risk" loan business alongside Fannie & Freddie

Ahh, but do you honestly think that, on a national level, the laws would permit a national lender to do this?

And do you actually think that GM is going to do this with lower profit new cars? Used cars actually have a pretty high profit margin if the dealer can move them, they can build in profits that cannot be added on to a new car price.

Your example is a great one of how small adaptive companies can beat out large organizations.
you are right about proffit margins but the eal key is the weekly collections that is where i expect gm will have a problem on a nation wide basis .
 

joec

New member
GOLD Site Supporter
Re: To big to fail, GM enters "high risk" loan business alongside Fannie & Freddie

First, I see no evidence that 3 million more jobs would have been lost. There were buyers who were standing in line to purchase the assets from bankruptcy. They would have kept most of the workers working.

And exactly how would it have brought down Ford?

We have plenty of other car companies here in the US, all building cars, Mercedes, Toyota, Honda, Subaru, etc would they have also been brought down?

Based on Fords statement before the sub committee when all 3 CEO testified.

You are right I didn't read the article well enough as I missed that part. The last car I financed was many years ago with GMAC and the last time I used credit for a personal item. It has been very pleasant not owing any monthly payments since the mid 80's when I started pay as I go.
 
Top