Alex_G

GMAC: Guess Who's Back for More Federal Assistance?

Tom,

You still don't understand the structure and end game of GMAC, do you? Maybe you're upset that you haven't enjoyed the 100-200% gains many of us have in their bonds the last few months. It also appears you didn't listen to the earnings call yesterday. If you did, you would have discovered that:

1. It was a "kitchen sink" quarter, with almost all of the losses coming from a tax bite caused by the conversion to corporation status and cleanup on ResCap, getting ready to put the walled off entity to sleep by the end of the year.

2. ResCap is where all of the problems are held. See point number 1 above.

3. The auto finance division (which will be the surviving entity) made money and will continue to do so.

The Feds will get every penny back when a well capitalized Ally bank sells shares to the public, and any losses will be borne by the current equity holders, which is Cerberus and the Trust that holds the rest.

All of the extra equity they need to raise is a result of the ResCap liability. My best guess is their bondholders will end up with some cash and equity in GMAC.