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Why are we concerned about saving
? Is this car and home lender really too big to fail?
These are legitimate questions as regulators consider whether to give taxpayer cash to
prop up GMAC.
Let's not wrap GMAC together with the bailout of
. These are two different things. Yes, GM owns 49% of GMAC. Privately held Cerberus Capital Management owns the rest. Cerberus also owns
. Maybe the carmakers would be better off without the distraction of running banking operations.
The great fear is that loans to prospective car buyers would dry up without GMAC, and that would kill any hopes of a revival for the U.S. car industry.
Hogwash. The U.S. government already provided hundreds of billions of dollars to lenders such as
Bank of America
that make car loans.
While Treasury Secretary Henry Paulson has hesitated to attach strings to those funds, he surely could. So far, we've not seen the banks that received taxpayer cash stepping up to pump money into the credit system in a big way.
It's time to rethink that strategy. Let's start with an honest assessment of whether we need GMAC.