The Treasury Department announced Wednesday the U.S. government would take a majority ownership stake in the troubled auto financier GMAC. Treasury will provide $3.8 billion to the auto lender, which has struggled to raise private funds.Now GMAC joins the ranks of Fannie Mae and Freddie Mac, General Motors and Chrysler and American International Group-all government owned entities. You know, the same government that has "no interest" in running private enterprise.
Treasury's equity ownership of GMAC will increase from 35 percent to 56 percent under the transaction, making the government and taxpayer the majority owner.
Treasury previously had invested $12.5 billion in preferred stock in GMAC. It owns a total of $13.1 billion in preferred stock in GMAC, which includes purchases, the exercise of warrants and 35 percent of common equity.
One little discussed fact about all of these companies? Not only were they so poorly run that though they are some of the biggest companies around, they couldn't make it, but since the government has stepped in they are NO BETTER off. Sure, they're still running; they're still around, but it is only thanks to the unlimited cash cow of the American tax payer that they live on. I mean heck, if I went out and spent all my money and my dad kept putting more money in my bank account.....pft, I would never fail either.
There is no person who has actually run a business who would continue to purchase companies that are failing to such a great extent that they could take down whole sectors of the economy and then do nothing to actually improve those companies. It is a complete falsehood to pretend that by simply buying up majority ownership in these companies the government has done anything to actually help the economy. Even though it is clear they do not believe it, the government is going to run out of money too and when they do these companies are going to fail anyway. The problem then will be they will take the government down with them.