What the Fed?: GM Sells U.S. a Lemon

Poor credit and a portfolio of bad loans aren't stopping General Motors' (GM Quote) finance arm from gaining access to the ample supply of federal dollars for U.S. corporations amid the credit crunch.

General Motors Acceptance Corp. has a B rating plus a negative outlook from Fitch Ratings and negative outlooks from both Moody's Investor Service and Standard & Poor's because of sliding car sales and growing turmoil in the U.S. auto industry. Yet, GMAC has applied for and been granted help from the Federal Reserve's Commercial Paper Funding Facility, which is only supposed to make loans to companies with high credit ratings willing to post good collateral.

How? Through spinning off some of its better assets into arm's length subsidiaries that, in turn, are rated highly by the same ratings agencies that hold so low an opinion of the parent company. ...