What Brought Us to the Brink of Disaster Shall Be Repeated

Thursday, January 1, 2009
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Hurry to your local GM dealer, because Hank Paulson has a deal for you. Within hours of receiving a $5 billion lifeline from the U.S. Treasury on Monday, GMAC — the financing arm of General Motors — slashed its car-loan rates and lowered its lending standards to help GM sell, sell, sell.

As of Tuesday, GMAC was offering 0% financing on several models — hey, if 0% is good enough for Ben Bernanke, it’s good enough for you — and said it would extend credit to buyers with credit scores as low as 621 — right on the edge of subprime territory. The median credit rating is 723.

This is from the Wall Street Journal. I heard the same story on NPR on Tuesday morning, right after GMAC got its bailout funds. NPR made the same statement, saying that GMAC had announced that it was dropping lending standards (that were supposedly tightening) now that it had some taxpayer-looted, Fed-approved cash in hand. So …… let’s hear it for repeating the same old mistakes!

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