We knew it was going to happen, it’s not like there was any question is GMAC was going to become a bank. If they did not achieve bank status GMAC would have gone into bankruptcy, which would have meant that GM would have not been able to obtain credit for consumers through any other source.  

Get it?  

If GMAC went down the tubes, GM would have followed.  The second GM received their “loans” GMAC was almost guaranteed to receive bank status.  It is all tied together.

So why does the Fed continue to work with their head up their collective asses? GMAC lost roughly $5.5 billion during the first 9 months of 2008 and major losses are expected moving forward. The additional $6B provided by the TARP funding will only allow the company to operate for a few more quarters.  

Maybe that was the intent of the government – put GMAC into a position where they can support GM until the new administration is in office, and where the new government has the ability to implement their own bailout. 

Frankly, I don’t understand how either GM or GMAC make it out of 2009 without going into some form of Bankruptcy restructuring.  They are both bleeding money like there is no tomorrow, the government continues to prop up businesses that should be failing on their own.

Anyone care to bet?

Related posts:

1. In the wake of Capmark, GMAC Asks for Fresh Lifeline
2. Integrity Bank of Alpharetta, Georgia, 10th bank to close this year
3. Capmark, Big Commercial Lender, May File for Bankruptcy
4. If oil continues to fall Russia may need a "bailout"
5. Are GM and Chrysler wondering what a “controlled” bankruptcy is? I am.