The Treasury Department is keeping billions of taxpayer dollars in America’s most troubled bank to spare President Barack Obama the embarrassment of another failed bailout, according to financial experts.
American taxpayers have given auto-lender Ally Financial more than $16.3 billionfrom the Troubled Asset Relief Program, leaving the government controlling 74 percent of the company. The company’s mortgage lending arm has been hemorrhaging money for years, but Treasury refuses to cut its losses for fear of embarrassing the administration.
“Geithner and the rest of Treasury doesn’t want to admit that it is a mess and they’ve been lying to us for three years,” said Christopher Whalen, cofounder of Institutional Risk Analytics. “They’re waiting until after the election.”
In March, Ally failed the federal stress test by the largest margin of any bailout recipient. The test measures a company’s ability to survive future economic crisis.
The company’s mortgage subsidiary, Residential Capital (ResCap), missed a $20 million interest payment on April 17. The following day, Fitch Credit Ratings downgraded ResCap to ‘C’ from ‘CCC,’ and placed Ally’s ‘BB-‘ rating to Rating Watch Negative.
Ally is now the worst performing bailout recipient, and many in the financial industry do not see a path to recovering taxpayer money.
Prior to May 2009, Ally was known as General Motors Acceptance Corporation (GMAC). It served as GM’s in-house auto-loan shop and provided financing to approximately 75 percent of the inventory at GM dealers.
In 2006, in order to generate capital, a struggling GM sold a 51-percent stake in a then-vibrant GMAC—which had entered the booming subprime mortgage business earlier in the decade—to Cerberus Capital Management for $14 billion.
“GMAC was taken out of GM in the first place because everyone thought it was so valuable,” Whalen said. “Investors wanted to salvage it from a GM bankruptcy and GM needed the cash at the time.” The sale also preserved GMAC’s credit rating, which allowed them to make even more subprime loans to house and auto buyers.
As the economic collapse took hold, GMAC/Ally looked to the government to stay afloat. Ally has spent nearly $9 million on lobbying since 2007.
Despite lacking the capital to qualify as a bank, the Federal Reserve granted Ally an exception and re-designated it a “bank holding company” in December 2008, a move that allowed it to receive bailout money. Within a week, the Fed bought a $5 billion stake in Ally and loaned the company another $1 billion.
In researching the pitch [for your company], you found that a lot of people were Googling “beef jerky.” How many?
Roughly around 7,000 to 8,000 people a day were searching for beef jerky, just in Google.
Were you into jerky before pitching this company?
How often did you eat it?
Proof there’s always SOME way to pay the rent. Check out the rest of the interview here.
Is this 18-year-old the world’s most beautiful woman? Science says yes.
“Hospital patients waiting in an emergency room or convalescing after surgery are being confronted by an unexpected visitor: A debt collector at bedside.”
The story of the Jewish engineer behind Hitler’s Volkswagen.
America’s not laughing, Obama!
A nice comparison of our president goofing around last night after years of failed policies and millions unemployed, while Romney gave a great speech about fixing our problems:
Democrat Rep. Yvette Clarke actually believes that spending massive amounts of taxpayer money under Obamacare, better known as redistribution of wealth, is ‘giving to others’. Yes, she really said that. And she doesn’t understand why this would upset the Tea Party:
There will always be those in our civil society who, for whatever reason, feel like something is being taken away from them when we give to others. That has always been the challenge in the psyche of many in our civil society. You have to save them from themselves despite those inclinations on their side. …
We are the big-tent Democratic party. We are intellectuals and we intellectualize everything.
She even boasts about being ‘well educated in New York City’. Yikes! This level of stupidity would be funny if people like her weren’t killing our country.
She also manages to smear the Tea Party at the beginning of the clip, but I think that pales in comparison to her not knowing the difference between charity and government spending.
Watch below (h/t: Breitbart):
Lou Dobbs “Chalk-Talk” for 4-24-2012 is about the “Crushing Cost of College”…
Israel apologizes to Andreas, the Danish pro-Palestinian troublemaker who got smacked in the face by an IDF Colonel’s rifle…funny but so truthful.
Found HERE. Do read all the blog daily.
So you’re unsure who to vote for? Let’s make this simple.
This is Tom. He’s the wonderful 99%
This is Dick. He’s the evil 1%.
President Obama will make that 1% “pay his fair share”. Now that’s worth a vote, is it not?
Tom makes $60K from USA Company. Tom pays 33% taxes. Tom takes home $40K.
Dick makes $6 million from USA Company. Dick pays 33% taxes. Dick takes home $4 million.
This is called INCOME tax.
Tom and Dick may write stuff off like child expenses or mortgages. Political parties play ping pong with this to encourage certain activity, like going green and discourage other activity like outsourcing labor. They do this to steer Tom and Dick in positive directions.
Tom and Dick have accountants to study these laws and account for their money to write things off. Clearly Dick will have many accountants. Tom may file his own taxes as it’s not much to account for.
The government has the IRS, a sort of “money police” who makes sure Tom and Dick do not cheat. Usually the IRS money police do not chase Tom since he makes too little to warrant a big investigation. Dick however is like a fat pig walking in front of a bacon factory!
So far so good. Things are FAIR.
Now say Tom and Dick run into Steve. Steve has an idea to make computers for home use, but he needs money to make his idea a reality. Tom and Dick decide to invest 100% of their INCOME in Steve’s idea.
If Steve’s idea breaks even, Tom’s $40K remains $40K and Dick’s $4 million remains $4 million. Nothing happens.
If Steve’s idea bombs, Tom loses $40K and Dick loses $4 million. They both are broke.
But if Steve’s idea yields profit, say doubling the investment:
Tom’s $40K makes $40K profit for a total of $80K.
Dicks’ $4 million makes $4 million profit for a total of $8 million.
This is not INCOME. This is called capital GAIN. (Your capital made a gain.) Both pays 15% tax on the capital GAIN.
15% off Tom’s $40K gain = $34K or $75K total.
15% off Dick’s $4 million gain is $3.4 million or $7.5 million total.
Still very FAIR. Everyone pays evenly. Clearly the 1% pay MORE because they make more.
The government taxes capital GAINs less to encourage investing. With Tom and Dick assuming all the risk but forced to share the gain, why would they invest in Steve’s crazy home computer idea at all? The bigger the capital gains tax, the better to simply keep their money.
While not impossible for Steve to find funds with fewer investors out there, why deliberately make it more difficult for people like him in an already difficult economy? Do we not want more Steves out there creating more jobs when he opens his new PC company? Do we not want more Steves out there creating more USA products for us to buy?
Maybe President Obama wants to raise the capital gains tax “To pay our debt!”. However, if the tax was raised to 100%, the increased revenue couldn’t pay off our current debt. It would make sense if all we needed were a few billion more to ask the rich to kick in a bit more. But we’re looking at a hole that is unsustainable. It is irrelevant if George Bush or George Jetson created the debt. The debt is there and we must deal with it.
Maybe President Obama believes the current government can do better with our money. It would make sense if they were the generation that got us to the moon using only 12K of computer power and no home computers from Steve. But this government is the lowest approval rated one in generations by both parties!
Read all of this HERE. Another blog to read daily!
Geesh….forgot all about this important milestone!
HAPPY BIRTHDAY TO ISRAEL…YOUR 64TH YEAR BEING A FREE COUNTRY!
JERUSALEM (AP) — Israelis celebrated their country’s 64th anniversary Wednesday with fireworks and military processions at a national ceremony in Jerusalem.
The festivities came immediately after Memorial Day for fallen soldiers and victims of militant attacks, an annual ritual of twinning grief with elation and pointing out the link between the two.
Preparations for Independence Day were marred last week when a lighting rig collapsed during a rehearsal, crushing a young soldier to death.
Speaking at the official ceremony, Parliament Speaker Reuven Rivlin cautioned against extremism of all stripes, naming ultra-Orthodox Jewish zealots, ideologues who burn mosques and activists who delegitimize the state as “those who threaten the future of Israeli society.”
Government statistics showed that Israel’s population grew by 137,500 since last year to 7,881,000. The Central Bureau of Statistics said 75 percent of the population is Jewish and 21 percent is Arab. The remaining 4 percent represents tiny minorities or immigrants who are not Jewish.
Traditional Independence Day celebrations include dancing in city streets and family cookouts in national parks. Some military bases open Thursday for visits, and Israeli cities host open-air concerts in honor of the holiday.