Thursday, May 28, 2009


According to this report by Reuters, it could take a long time for the Treasury to recoup its advances to GMAC, maybe more than 15 years. The Treasury has already advance $12 billion to GMAC and according to the stress tests, GMAC needs several billion more.

Now that the initial TARP funds have provided a base to the steady the financial system, I would like to see future TARP advances to done in light of an acceptable repayment plan. Most lenders evaluate how their loans will be repaid before the loans are made. It is probably at a point in the cycle where future advances should be based on the likelihood of repayment. I know GMAC is the preferred lender to GM and Chrysler dealers and buyers, but couldn't JP Morgan, Bank of America and Wells Fargo have stepped into this role?

Stayed tuned, the financial press will likely start to pay attention to this issue.

Cheers, Mike

No comments:

Post a Comment