Taxpayers Still on the Hook for General Motors' Bailout $9.7B
#16
proof is in the pudding all right. Think the $9B was the end of it? This isnt over
Subprime Loans Are Back Thanks to GM
Subprime Loans Are Back Thanks to GM
GMF has the riskiest lending portfolio of any major car company: 96 percent of its customers have credit scores below 660. GM’s lending habits parallel those in the housing market leading up to the 2008 crash, [Auto expert Ed] Niedermeyer said.
#17
Lexus Fanatic
No. Apples and Oranges. 3-4 years from now, it will be a different GM than we had in 2008-2009.
And, living in Europe, your own personal tax money, out of your pocket, was probably not involved......mine was. I say money well spent.
#18
Lexus Fanatic
iTrader: (20)
impending car loan crisis...
impending student loan crisis...
impending obamacare fine/tax crisis...
impending nuclear iran crisis...
impending inflation/debt crisis...
future looks bright
impending student loan crisis...
impending obamacare fine/tax crisis...
impending nuclear iran crisis...
impending inflation/debt crisis...
future looks bright
#21
Lexus Fanatic
Second, If dealers are selling or leasing new vehicles to those who basically can't afford them, then that's not the corporation's fault.....that's the fault of the sales managers and business managers at the dealerships who approve the sales. GM and Chrysler can't control that from their corporate headquarters...dealerships are usually privately-run, privately-owned businesses.
And, besides, most of those failures aren't going to affect the corporation as much as the dealership. Once the dealership orders a new car from the factory and pays for it wholesale, the corporation gets its money (and profit) onr the car. Making money on it at the dealership is then the dealer's problem, not the manufacturer's.
Last edited by mmarshall; 12-31-14 at 12:25 PM.
#22
Lexus Test Driver
It's because of delusional thinking like this that the US is 17 trillion+ in debt.
#23
Lexus Fanatic
mmarshall already said he is happy with taxpayers losing 9.7 billion dollars to make a couple cars "worth buying". What on earth makes you think he wouldn't be equally happy with taxpayers losing 9.7 billion dollars so that people can own some of those cars?
It's because of delusional thinking like this that the US is 17 trillion+ in debt.
It's because of delusional thinking like this that the US is 17 trillion+ in debt.
In the case of GM and Chrysler, though, the benefits of the spending clearly outweighed the negatives. And those benefits involved more than just some new Chevy/Buick and Dodge/Chrysler/Jeep models.
Last edited by mmarshall; 12-31-14 at 01:11 PM.
#24
There needs to be a way to let General Motors die without taking the US economy with it. Since the bailout, they have yet to produce any cars worth buying. GM put up nice displays at the Los Angeles Auto Show and Orange County Auto Show which just further confirms that things are business as usual at the company (Buick Enclave, Chevrolet Cruze, Cadillac XTS, etc). GM has made significant improvements since the 1990's but not good enough to compete against what the rest of the world has to offer.
#25
Lexus Fanatic
confirms that things are business as usual at the company (Buick Enclave, Chevrolet Cruze, Cadillac XTS, etc). GM has made significant improvements since the 1990's but not good enough to compete against what the rest of the world has to offer.
#26
Lexus Test Driver
First predatory loans are illegal under new laws that took effect a few years ago....that will likely, but not totally, prevent a repeat of what happened in 2008. But it is not a predatory loan is someone is simply too irresponsible or lazy to read the contract before he or she signs it. If one is going to sign a contract as an adult, then one has to have the responsibility of an adult....and know when not to bite off more than one can chew.
Second, If dealers are selling or leasing new vehicles to those who basically can't afford them, then that's not the corporation's fault.....that's the fault of the sales managers and business managers at the dealerships who approve the sales. GM and Chrysler can't control that from their corporate headquarters...dealerships are usually privately-run, privately-owned businesses.
And, besides, most of those failures aren't going to affect the corporation as much as the dealership. Once the dealership orders a new car from the factory and pays for it wholesale, the corporation gets its money (and profit) onr the car. Making money on it at the dealership is then the dealer's problem, not the manufacturer's.
Second, If dealers are selling or leasing new vehicles to those who basically can't afford them, then that's not the corporation's fault.....that's the fault of the sales managers and business managers at the dealerships who approve the sales. GM and Chrysler can't control that from their corporate headquarters...dealerships are usually privately-run, privately-owned businesses.
And, besides, most of those failures aren't going to affect the corporation as much as the dealership. Once the dealership orders a new car from the factory and pays for it wholesale, the corporation gets its money (and profit) onr the car. Making money on it at the dealership is then the dealer's problem, not the manufacturer's.
As for corporate policy......yes, the dealership buys the car and then resells it to the buyer. But the dealership is not financing it. If you're not paying in cash or via outside lending, the finance manager will hook you up with a loan through GM Financial....which is owned by GM. As the lender, they set policies and qualifications for loans....the manager is just working on their behalf.
If GM cared at all about responsible lending in their dealerships, they could very well tighten their policies through GM Financial. But why give up an effective marketing technique when Uncle Sugar will guarantee the bad debts?
There needs to be a way to let General Motors die without taking the US economy with it. Since the bailout, they have yet to produce any cars worth buying. GM put up nice displays at the Los Angeles Auto Show and Orange County Auto Show which just further confirms that things are business as usual at the company (Buick Enclave, Chevrolet Cruze, Cadillac XTS, etc). GM has made significant improvements since the 1990's but not good enough to compete against what the rest of the world has to offer.
#27
Lexus Fanatic
Yes, people should be adult enough to not enter into stupid contracts. While it's nobody's legal obligation to protect an idiot from himself,
As for corporate policy......yes, the dealership buys the car and then resells it to the buyer. But the dealership is not financing it. If you're not paying in cash or via outside lending, the finance manager will hook you up with a loan through GM Financial....which is owned by GM. As the lender, they set policies and qualifications for loans....the manager is just working on their behalf.
(BTW, interesting that you mention that. Apparently, the old GMAC (General Motors Acceptance Corporation) which formerly did the corporate-level financing, either went bankrupt with the parent corporation or had the name changed.
To be fair, I've driven a few of their post-bailout vehicles and they have improved significantly. I still find Ford to be better IMO.
#28
Lexus Test Driver
Actually, I'd say it is absolutely a legal obligation to protect people from themselves when the result of the behavior of those people is that legislators decide taxpayer money should be used to bail out those people and/or the entities making loans to those people.
#29
Lexus Fanatic
Anyhow, I don't see a need to keep arguing this. We've both made our points. I'm signing off for New Years' Eve. Have a nice holiday.
Last edited by mmarshall; 12-31-14 at 06:18 PM.
#30
Lexus Champion
When financing or leasing a vehicle through the manufacturer's financing arm, the dealership is merely the middleman acting on behalf of the automaker's bank. Defaulted loans or leases will not harm the dealership but will harm the bank holding the loan / lease; the only way the dealership would be harmed is if the bank goes bankrupt and cannot pay the dealers or the automaker goes bankrupt and refuses to pay their dealers.
In fact, the automakers' financing arms likely won't get harmed (much) either in case of a default loan / lease; the automaker likely sells its debts to a larger financing house / bank. That is what happened in the subprime mortgage crisis of 2007 / 2008. Mortgage providers sold them to banks, so the small mortgage providers got their money while the large banks that bought the debts were left holding the defaulted loans. Its only when the crisis really hit and it started to snowball that everybody got hurt.
If both automakers and buyers get greedy and the numbers of subprime loans skyrockets, I could foresee being hit with the same problem as 6-7 years ago (but likely on a smaller scale). If the economy slows down (it still has not regained the strength of the pre-recession times) and borrowers start to default, we could see financial institutions getting into trouble and the automaker(s) in trouble as they suddenly find themselves with endless parking lots filled with repossessed cars and unsold new cars.
I am not entirely convinced that the New GM has learned anything from its old ways. It is still churning out new cars and then relying on incentives (and now subprime loans) to sell those unsold cars. After teaching the car-buying public (like Pavlov's Dogs) to expect huge incentives or low-rate loans on cars, they will not buy until these discounts are made available. This will be a never-ending cycle until GM says STOP.
In fact, the automakers' financing arms likely won't get harmed (much) either in case of a default loan / lease; the automaker likely sells its debts to a larger financing house / bank. That is what happened in the subprime mortgage crisis of 2007 / 2008. Mortgage providers sold them to banks, so the small mortgage providers got their money while the large banks that bought the debts were left holding the defaulted loans. Its only when the crisis really hit and it started to snowball that everybody got hurt.
If both automakers and buyers get greedy and the numbers of subprime loans skyrockets, I could foresee being hit with the same problem as 6-7 years ago (but likely on a smaller scale). If the economy slows down (it still has not regained the strength of the pre-recession times) and borrowers start to default, we could see financial institutions getting into trouble and the automaker(s) in trouble as they suddenly find themselves with endless parking lots filled with repossessed cars and unsold new cars.
I am not entirely convinced that the New GM has learned anything from its old ways. It is still churning out new cars and then relying on incentives (and now subprime loans) to sell those unsold cars. After teaching the car-buying public (like Pavlov's Dogs) to expect huge incentives or low-rate loans on cars, they will not buy until these discounts are made available. This will be a never-ending cycle until GM says STOP.