GMAC releases its results; I don't see any caveats about their ongoing viability, as accompanied the GM release.
- Fourth quarter net income of $7.5 billion; full-year net income of $1.9 billion
- $11.4 billion gain from largest corporate bond exchange ever completed
- Continued pressure in the automotive finance and mortgage businesses
- GMAC becomes bank holding company and converts ILC to state bank
- Received $5 billion investment from U.S. Treasury's Troubled Asset Relief Program (TARP)
- Cash and cash equivalents balance of $15.2 billion
NEW YORK (Feb. 3, 2009) -- GMAC Financial Services
reported 2008 fourth quarter net income of $7.5 billion compared to a
net loss of $724 million in the fourth quarter of 2007. Results in the
quarter were largely driven by an $11.4 billion after-tax gain from the
extinguishment of debt related to GMAC's fourth quarter bond exchange,
which was partially offset by losses in the global automotive finance
and mortgage businesses. Adversely affecting results in the quarter
were an impairment on lease residuals due to falling used vehicle
prices, provisions for loan losses as credit quality trends and asset
values continued to decline, and impairments on equity investments.
For the full-year 2008, GMAC reported net income of $1.9 billion, compared to a net loss of $2.3 billion for 2007. Affecting results for the full year were significant losses at Residential Capital, LLC (ResCap) as adverse mortgage and housing market conditions domestically and internationally continued to persist. In addition, weak credit conditions and impairments on lease residuals led to losses in the automotive finance business. The insurance operation remained profitable throughout 2008.
Am I mistaken that absent the five billion bailout, their losses would have been 3.1 billion? Or worse than 2007? I don't understand all this, so I may be way off. Somehow, worsening conditions adding up to greater profit sounds like an extraordinary situation, to me.
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Posted by: kim | March 10, 2009 at 11:44 AM
"It is not alive!"
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Posted by: kim | March 10, 2009 at 11:46 AM
GM is going to be rescued as a giant "make work" program. It's going to be cheaper to keep all those people making cars nobody wants than to deal with the fall out of so many unemployed people with houses they can't sell in a state nobody will move their business to.
Posted by: MayBee | March 10, 2009 at 02:14 PM
I say--as I said to a neighbor in favor of a GM bailout "to keep the workers in the middle class"--do it with YOUR money.
Posted by: clarice | March 10, 2009 at 02:24 PM
I say--as I said to a neighbor in favor of a GM bailout "to keep the workers in the middle class"--do it with YOUR money.
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We're going to do it with the magic money from the wealthy, clarice.
Posted by: MayBee | March 10, 2009 at 02:48 PM
I suppose she expects that her support payments will be undiminished by her husband's change in circumstances ,MayBee. Cause there's no one in my neighborhood who doesn't meet O's low bar for "rich".
Posted by: clarice | March 10, 2009 at 03:17 PM
Why are the proposed new tax rates for the rich not indexed for inflation?
Or am I missing something?
Posted by: bad | March 10, 2009 at 03:53 PM
Sorry, I meant adjusted for inflation from the rates of the Clinton years.
Or something like that....
Posted by: bad | March 10, 2009 at 03:55 PM
with overtime, GM workers make a lot more than most middle class workers. One of the tactics they use to generate overtime is carefully planned slowdowns of assembly lines, maintenance, housekeeping, etc, so that they have to come in for a few hours on Saturdays or off shift to complete what a normal worker would have done within a 40 hour work week. This is standard operating procedure at most of the Big 3 factories.
Until they have reasonable work rules, the problems will remain.
Posted by: Matt | March 10, 2009 at 04:59 PM
with overtime, GM workers make a lot more than most middle class workers.
O has stoked the fires of envy so well that the above statement is why so many Americans are furious about the auto bailouts.
Posted by: bad | March 10, 2009 at 05:10 PM
Six percent rise in the Dow? A zombie cat bounce. Please don't tell me you really think Citi's become profitable.
Not with one thousand, one hundred and fourteen trillion dollars in derivatives zombie walking about.
And you think card check is going to help the market? That's the newest push from these ham-handed destroyers.
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Posted by: kim | March 11, 2009 at 07:23 AM
This will be just like the good old days in the Soviet Union, GM dealerships will be full of poorly made "GREEN" cars for the new "GREEN" economy we are told is coming. The union GM workforce will become the union Govt workforce once the final bailout is complete. It will turn out overpriced cars that won't start, won't run, and won't sell. But it will be green and glorious!
Posted by: Boots | March 11, 2009 at 03:26 PM