GMAC might relocate HQ to Charlotte

[brokenraven]

I guess this doesn't rule out the possibility of a HQ relocation entirely, but it's not quite the good news we were expecting. GMAC plans on cutting about 90 jobs in the state, mostly in Charlotte, according to this article:

http://www.charlotteobserver.com/business/story/168968.html

Does anybody think this is telling of their plans (or lack thereof) for a future HQ relocation?

[atlrvr]

I don't think it makes much difference....these jobs being cut (ResCap) have nothing to do with corporate functions.

[monsoon]

.....

Does anybody think this is telling of their plans (or lack thereof) for a future HQ relocation?

[monsoon]

I am not so sure about long term stability since this is a move on GM and Cerebus's part to simply get up to the federally funded taxpayer bailout trough where all the other finance industry pigs are currently feeding themselves. Whether they are successful at this is yet to be seen. .......

[HopHead]

CNBC is reporting this morning that GMAC is saying that it can't generate the funding to meet federal requirements to become a bank holding company. In fact the network said they are not even close to it. They did not say it was over, but that at the moment, it didn't seem likely to happen. No mention at all on the rumor started by the Observer they might move to Ballentyne.

[atlrvr]

CNBC is reporting this morning that GMAC is saying that it can't generate the funding to meet federal requirements to become a bank holding company. In fact the network said they are not even close to it. They did not say it was over, but that at the moment, it didn't seem likely to happen. No mention at all on the rumor started by the Observer they might move to Ballentyne.

[JayGee]

GMAC is was given bank holding company status on Wednesday by the Fed. so that can now qualify for the bailout funds. I believe they were able to achieve this by converting a large chunk of debt into preferred equity. One of the conditions for the getting the bank status was for GM to reduce ownership to less than 10% (from 49%) which should help them weather GM's own troubles better.

Anyway, this is a step forward to getting them on more stable ground.

[monsoon]

^It appears they did not get it done. The financial pundits were expressing surprise at the lack of information on this matter. The issue IMO is Cerebus which also owns Chyrsler which is a private equity firm. None the less, the Bush administration gave GMAC $6B last night in another taxpayer finance giveaway to another finance company whose management ran it into the ground. How this affects their bid to become a real bank is unknown. Still no mention of Charlotte anywhere except by the Observer and it's parrot WCNC and they have been pretty mum about all of this.

On the earlier action by the fed to give GMAC holding company status, as you mention, it came with conditions which GMAC failed to meet. I said earlier they were not going to be able to meet them now it remains to be seen how far the Bush administration will let them go. It should also be noted the Fed action was not unanimous. One brave individual voted against it saying that it would set a bad precedent. (I think they need to change precedent to president. At least that long nightmare will be over in 22 days)

[atlrvr]

Yes....they got $6B of the $700B.....I thought the whole point of the $700B bailout was to prop up financial institutions. Its funny how the preceeding comments has a political ring to it as it was a plan that had proponents on both sides of the political spectrum. In 22 days, it will be the Obama administration giving taxpayer financed handouts giveaways to other finance companies whose management ran them into the ground.

As far as how this affects their bid to become a real bank, I think its pretty clear that the Fed is going to make it happen one way or another. They have already transferred the funds that are restricted to bank holding companies, and approved GMAC to become a bank holding company. As noted, they haven't announced how much their raised in their swap, but I'm sure the Fed felt confident that they will be able to reach a sufficient level of equity (even if it means the Fed plugs the necessary dollars to meet their own criteria).

[monsoon]

Of course it has a political ring to it. The CEOs of major corporations, who have ruint their companies trough extremely bad management, are now demanding the public to cover their loses, so it's very political. The current administration, which controls the treasury, has decided that an economy destroyed by too much credit, and excessive spending should be fixed by, guess what, making more credit available so that people will spend more. It has a certain level of insanity to it that even Hollywood wouldn't put in a script. It's surreal.

In the case of GMAC, Bush gave them $5B-$6B which means they will now start making car loans to people with credit scores of 621 or higher instead of their current low standard of 700. This is their business plan for recovery. In other words, more loans to people who should not really be getting them. This money is not coming with any conditions and if GMAC fails to pay the money back, then their parent Cerebus, which owns 51% of the company is not on the hook to pay any of it back. You, your children, and maybe even your grandchildren, will be working to cover the failed loans of all those Cadillacs, Pontiacs, and GMC trucks purchased with this money. (I speak metaphorically)

It remains to be seen if GMAC will become a bank. The hang up seems to be in the people who currently control GMAC not wanting to give up that control to make it eligible to become a bank. If it does become a bank, and they do in fact create some sort of HQ in South Charlotte, I am willing to bet it is also one that a lot of people in Charlotte should not bet their futures on. A business based on using governmental money to make loans to marginal people for cars, a quickly depreciating asset, manufactured by a company that is also on the verge of bankruptcy, sounds simply incredible. Will Obama continue pouring money down this black hole when he comes into office? I don't know. I would hope the man is smarter than this because if this is the kind of thing that we will be getting to pull us out of the mess created by Bushonomics, then lord help us.

[palmetto75]

At the risk of getting too off topic... I actually support the $$$ to GMAC. This is what should have been done in the first place instead of the direct loans to the actual car makers. The Big 3 claim they are out of cash and cannot sell cars because financing is not available, and now at least per GMAC it is available. This at least forces them to come up with a new excuse when they come ask Obama for more dinero in mid Feb. Maybe they come to Washington via stagecoach this time.

[hueion39]

In the case of GMAC, Bush gave them $5B-$6B which means they will now start making car loans to people with credit scores of 621 or higher instead of their current low standard of 700. This is their business plan for recovery. In other words, more loans to people who should not really be getting them.

[SmellyCat]

Student Loans are basically given away with no real measure of ability to repay, but we do so because of the societal benefit.

[monsoon]

....To what extend do you believe minorities and low income classes should be able to participate? Student Loans are basically given away with no real measure of ability to repay, but we do so because of the societal benefit.

[Norm2]

I have plenty of low income friends, and most of them have bad credit. maybe not all low income people have bad credit, but the ones that I do know have bad credit. Low income people are more likely to use credit when in a bind and then are not able to pay the credit card or loan back because they don't make enough money. That I believe is why there is an image in America that portrays all low income people having bad credit. While not necessarily true for all, it might be a majority.

[monsoon]

^I have been a low income person and I know plenty of people that don't make much money. Yet we pay our bills. It's a pointless argument that doesn't even have anything to do with this topic. I don't know why I wasted my time.

You guys have fun over wishing how great GMAC's bailout will be for Charlotte.

[hueion39]

Why is you believe that it's only minorities and low income people have bad credit scores? Amazing that you equate giving a federal subsidy to get an education to that of handing over money for people to guy cars. Of course, it could simply be nothing more for a distraction given that it is not defensible. In any case, this topic is really about what it means for Charlotte, and it isn't good as I stated above.

[schmopperX]

might be a majority.

[Norm2]

I had talked to someone about the article that GMAC may move here. He basically told me that it does not make sense. I was told that GMAC very recently combined a lot of their offices so it does not make sense for them to move here. I do not know how true this is, but if true it makes sense.

[Neo]

Not defensible? Well, since I want to get on with my night... lets just say that the gov't wants to drive people's choices. The ability to repay an auto loan, home loan, business loan, etc. is based on more than just a credit score.

I just wanted to add something personal since Monsoon had alluded to 700 being a relatively low credit score and folks with lower credit scores shouldn't be given auto loans.

"In the case of GMAC, Bush gave them $5B-$6B which means they will now start making car loans to people with credit scores of 621 or higher instead of their current low standard of 700."

My wife and I have a combined income of over $100k, we have *never* had a late payment and are in good standing with our mortgage lender and one other loan. Despite these facts, we both have a credit score that is lower than 700, yet I would argue that we are in good position for an auto loan. I have seen my credit score fall from the mid 700's to the upper 600's in the last year, but without cause. Nothing is awry with my credit report from any institution and nothing has changed with my income level or ability to pay any bills or loans.

By offering loans to those with scores lower than 700 doesn't mean that you're offering a loan to someone who can't pay the monthly payment so I disagree with the statement made by Monsoon that I have quoted above in italics.

FWIW, President-elect Obama also supported the bailout of financial institutions and will no doubt continue to do so after he is President.

[jednc]

FWIW, President-elect Obama also supported the bailout of financial institutions and will no doubt continue to do so after he is President.

[RiverwoodCLT]

The credit score can be wrong. It had me living in Memphis, Tenn at one time. I have never lived in Memphis. I tied to take it off the report but it would not let me.

You do not have to be at fault. There are people running the report and that do not get it it right all the time.

[HopHead]

According to Charlotte Biz Journals, GMAC has shifted to uptown for potential HQ spot of 100,000 sqft: GMAC Looking at Center City. A GMAC spokesperson said they anticipate hiring of Charlotte workers as they transistion to a bank holding company. Currently their Detroit HQ has 1,500 people.

[tiblerbrit]

There are also quotes from Hugh McColl and Johnny Harris, so its more than just fluff this time.

[atlrvr]

NASCAR Tower I have no knowledge, but it fits the auto theme....

Also, the GMAC stance on denying the rumors have shifted from flat out denial, to no comment, to nothing to announce yet.

GMAC and MS won't replace all the lost jobs, but its better than nothing.....