Quote:
'GMAC is back in the game'
GMAC said Tuesday that it would immediately resume financing to a wider range of car buyers, a day after the Treasury Department injected billions of dollars into the lender.
GMAC said it would modify its criteria to include financing for customers with a credit score of 621 or above, a significant expansion compared with the 700 minimum score put in place two months ago.
GMAC had significantly cut back on the number of loans it offered as it struggled to stay afloat.
And General Motors said Tuesday that it would begin to offer zero-percent financing on some models as it tries to jump-start sales.
"That brings a lot more customers into play for us," said Mark LaNeve, GM's vice president for North American sales and marketing.
"It's a strong signal that GMAC is back in the game and that GM dealers are back in the game of financing vehicles."
The Treasury Department injected $5 billion into GMAC on Monday as part of a deal that will let the lender convert itself into a bank holding company to reduce its borrowing costs and borrow money at low rates from the Federal Reserve.
"This is exactly what some of the government money was intended to do – stimulate credit, stimulate business," Mr. LaNeve said.
|
Lower credit rating = higher risk.
0% financing = very low return.
Loans with higher risk, lower return...This is
exactly what the government money is intended to do. Does this soud like a good investment strategy?
So what sort of long term ramifications should we expect from a government policy which systematically encourages higher risk, lower return lending?
hmmm....
The government bailout of the financial mess is nothing more than a radical acceleration of the very policies that caused the mess in the first pace.