What’s to be done when everything is leveraged? Where does one go when margins are so thin? How do you get credit when all there is is debt? How do you get water from a rock? The answer to these and many other questions, dear worst-reader, is simple. You mis-manage your company like no other. You mis-manage everything and blame someone else (for it). You hire college grads who have been trained to the highest levels of mis-management. You are a crony organisation, you are a cancer–but so is everything else. And. You are General Motors. GM has to be one of the worst run companies in human history–yet it ticks on and on and on. A company that was bailed out in 2008/9 to the tune of (insert # here) billion dollars. Ralf Nader says GM was given $50billion from the US government. The money was part of TARP. Most of that money, btw, was not used to help the factories of GM, which are practically non existent in the US anyway. Nor was it used to prop up worker salaries or even management salaries. No. The money was used–and is still being used–to maintain the financial-isation of GM which emulates the financial-isation of #americant post Ronald Reagan. That financial-isation, basically, is one thing and one thing only: Debt. Which means, even though GM sells millions and millions of cars every year, it cannot manage its way out of the mess it’s gotten itself into by following and wallowing in the greed culture that is Reagan’s #americant. As bad as that sounds, GM is in the news now for having to pay a fine of $900 million to the US government because it built cars, knowingly, with faulty parts that supposedly lead to the deaths of hundreds of customers. Ha. Ha. Ha. Ha. Ha. Pause. Swallow. Clear throat. Now don’t get me wrong. I’m not laughing at the death of anyone. But I am laughing at the idear that GM cannot die. On top of that, where do you think the fine-money GM is paying is gonna go? As Ralph Nader nails it, the money is nothing but…
“The government gets the $900 million, which is like a drop in the bucket for GM. By the way, that money really is tax money recycled. GM, from the bailout, still has billions of dollars of taxpayer money in its treasury.” -Ralph Nader
Wow. This is one of the world’s largest companies and it’s managed by buffoons. Yet it ticks on and on and on. I guess part of all that ticking is the reality that buffoons feed off of buffoons. This is how the world ticks, baby.
Rant on. -t
Links that motivated/helped with this post:
For posterity sake, from the Ally Finance link above, I’ve taken the liberty of cutting and pasting part of the wiki text here. I’ve removed the hypertext source links of this info on account I don’t feel like managing those links. The point of this re-post is, simply, I love the way this reads. I suppose it doesn’t matter that I don’t think this type of info can stay up forever–as sometimes mysterious things happen to wiki content. But all kidding aside. The evils perpetrated by those who are supposed to be in “business” are limitless. And this text covers that. These companies should have gone out of business years ago. Yet they tick on and on and on. Here’s how/why. I guess.
- In 1919, GMAC branches opened in Detroit, New York, Chicago, San Francisco, and Toronto.
- In 1985, GMAC formed GMAC Mortgage after it acquired the mortgage loan operations of the Colonial Mortgage Service companies and the servicing arm of the former Norwest Mortgage, Inc. In subsequent years, the division acquired additional mortgage-related operations, including ditech.com, and in 2005 the division was reorganized into Residential Capital (ResCap). By that time, the company was heavily into subprime lending.
- In 2000, GMAC was given conditional approval to form GMAC Bank.
- In 2006, General Motors Corporation sold a 51% interest in GMAC to Cerberus Capital Management, a private equity company. (The next year, Cerberus acquired Chrysler Corporation.) Also in 2006, GMAC divested a majority stake of GMAC Commercial Holdings, its real estate division, to a trio of investors — Goldman Sachs, KKR and Five Mile Capital Partners — thereby creating Capmark Financial Group Inc. Capmark later filed for bankruptcy and was acquired in part jointly by Leucadia and Berkshire Hathaway.
- On December 29, 2008, the United States Department of the Treasury invested $5 billion in GMAC from its $700 billion Troubled Asset Relief Program (TARP).
- On May 15, 2009, GMAC’s banking unit changed its name to Ally Bank.
- On May 21, 2009, the U.S. Treasury announced it would invest an additional $7.5 billion in GMAC LLC, which gave the U.S. government a majority stake in the company.
- On December 30, 2009, the U.S. Treasury department said that they would invest another $3.8 billion in GMAC because the company had been unable to raise additional funds in the private sector. This raised the total government investment in GMAC to $16.3 billion.
- On May 10, 2010, GMAC Inc. announced that it re-branded itself as Ally Financial Inc.
- On August 25, 2010, Ally briefs its customer Freddie Mac that it would hold a moratorium on foreclosures and evictions. “Ally Financial officials knew a large number of documents submitted in support of mortgage foreclosure proceedings were mishandled as early as August, but did not take action to stop the evictions until last week, according to a Bloomberg report” stated Washington Post reportage dated September 24, 2010.
- On September 20, 2010, Ally announces that, effective October 1, 2010, it will halt evictions on homes in 23 states due to ‘an important but technical defect’ in its foreclosure filings. (google: ally robo-signing)
- On December 30, 2010, the U.S. Treasury announced it would be converting $5.5 billion of interest-bearing preferred Ally stock into common equity.
- On March 31, 2011, Ally Financial filed with the SEC for an initial public offering, although was not pursued due to stock market volatility of summer 2011.
- On November 9, 2011, the bank announced it was considering filing for bankruptcy-protection for its ResCap mortgage unit, after the unit’s loan write-downs of around half a billion dollars brought it close to the legally required net asset value threshold of $250 million.
- As of January, 2012, TARP had about $12 billion invested in Ally. The government stake represented a 74% ownership interest in Ally. In March, 2012, Ally failed the Federal Reserve’s financial “stress test” for capital adequacy. The company said in a statement that the Fed’s “analysis dramatically overstates potential contingent mortgage risk”. A possible outcome would be a requirement to raise additional capital.
- On May 15, 2012, the company put its ResCap subsidiary into Chapter 11 bankruptcy after it failed to make an interest payment of $20 million on unsecured debt. ResCap had written off $22 billion in mortgages in 2009, 2010, and 2011 much of it subprime mortgages. The move was seen as attempt for the company to focus on its profitable core business of auto loans and direct banking (Ally showed a $2.72 billion profit in 2011 in its auto finance unit but had a $402 million loss at ResCap).
- In mid-2013, financial columnist Allan Sloan wrote that he thought the Ally bailout would yield a modest profit for the US Treasury. He wrote: By my conservative math, that [US] stake is worth $1.5 billion more than it cost. And I’m not including the $6.1 billion of dividends the government has collected from Ally. Taxpayers coming out ahead on a company that spent $8.3 billion, all of it lost, to keep ResCap afloat? That has committed another $2.3 billion to settle its ResCap liabilities? Yes, it’s true. Sloan also opined that Cerberus Capital and its private-equity investors were “down almost 75 percent on their $8.15 billion Ally investment”. Sloan emphasised that his analyses were vulnerable to changing factors before final disposition.