Wednesday, October 29, 2008

John Snow's Cerberus wants GMAC to be Bank Holding Company

Private equity stands to benefit on numerous fronts. Cerberus Capital Management, the private equity underwriter (PEU) majority owner of General Motors and Chrysler, seeks to make GMAC a bank holding company. Under that designation, GMAC could access Hank Paulson's Treasury bailout plan.

The Wall Street Journal reported:

As a bank holding company, GMAC could receive equity injections from the Treasury Department's capital purchase program and have its debt temporarily guaranteed by the Federal Deposit Insurance Corp.

In addition, GMAC could gain some flexibility in funding its operations. Its borrowing costs have soared due to battered credit ratings.

As a federally chartered bank, it could access the Fed's discount window for inexpensive, short-term emergency loans.

Cerberus chairman John Snow is a former Bush Secretary of the Treasury. PEU's have a long history of leveraging high level political connections to their advantage. Repeatedly, the taxpayer pays for Bush sponsored Corporafornication.