GM has said it will keep ties with Ally Bank (formerly GMAC) to handle most of their auto financing, but has also announced that they will purchase AmeriCredit for $3.5 billion. GM is seeking AmeriCredit to finance those higher risk consumers who may have poor or bad credit and are looking to purchase a GM vehicle.
So, in essence, GM is looking to gamble on more bad loans to consumers who really can’t afford them and may end up eating the cost themselves – hey wait.. haven’t we already been down this road once in very recent times? Apparently GM’s leadership forgot already and is ready to make the same mistake again.
Fortunately, Senator Charles Grassley is questioning GM’s purchase of AmeriCredit and has been quoted by Bloomberg as saying “If GM has $3.5 billion in cash to buy a financial institution, it seems like it should have paid back taxpayers first.” He has also asked the inspector general of the TARP program to investigate this purchase.
While GM can do anything it wishes, as long as they abide by the terms of the bailout, so it’s doubtful that Grassley’s motions will stop this purchase, it is refreshing to see a politician actually asking a valuable question.
Category: General Motors