On the eve of what will probably be — despite loud protestations and numerous solid reasons why not — the third round of bailout money thrown at GMAC, I thought it might be fun to give you some Fun Facts About GMAC.
Sometimes the whirl and swirl of an ongoing financial crisis makes you forget or forego close scrutiny of interesting factoids. These gosh-darn nit-picky details are the kind that should encourage you to form stronger and, just maybe, contrary opinions, resisting the push to “go along, get along.” After, all, when criticizing Treasury Secretary Tim Geithner now, it’s easy to forget that our “head dollars guy” was challenged by that technically tough software tool called Turbo Tax.

1. GMAC itself questioned their viability as a “going concern” last November in their 3rd quarter 10Q:

“In light of [Residential Capital's ("ResCap")] liquidity and capital needs, combined with volatile conditions in the marketplace, there is substantial doubt about ResCap’s ability to operate as a going concern. If GMAC no longer continues to support the capital or liquidity needs of ResCap or ResCap is unable to successfully execute its other initiatives, it would have a material adverse effect on ResCap’s business, results of operations, and financial position.”

However, after the US government gave GMAC the first of its so far two liquidity injections in December of 2008, and in spite of GM’s bankruptcy — which was seen by some as a certain bell weather for GMAC — GMAC’s auditors, Deloitte, saw no problems and gave GMAC a clean opinion for 2008.
2. GMAC has the same repurchase risk due to potentially crappy lending practices as New Century had and WFC/Wachovia have. And the total exposure is no better disclosed. Page 18 of the latest Annual Report:

We may be required to repurchase contracts and provide indemnification if we breach representations and warranties from our securitization and whole-loan transactions, which could harm our profitability and financial condition.

3. GMAC’s former Chairman, Ezra Merkin runs the investment partnership Ascot Partners L.P and was a prominent Madoff investor. He was forced to step down after the December 2008 bailout and a new management team and Board of Directors was named. New management includes several executives from Bank of America, including the latest president, Al de Molina. Mr. de Molina took over for Eric Feldstein in March after serving as both BofA’s and GMAC’s CFO.
GMAC is run by Bank of America executives. Enough said.
4. Al de Molina brought in Robert Hull, a former CFO of Bank of America Wealth Management, last November to be the new CFO at GMAC. Mr. Hull has a Bachelors degree in Foreign Affairs. Somewhere along the way his official bio says he picked up an MBA from Harvard, although this is not on his LinkedIn profile.
He is not a CPA.
We all know how well that works out.
5. GMAC was granted status as a bank holding company by the FDIC Fed late last year in order to allow them to take advantage of the Federal Government’s programs. As of this writing, it is not clear whether they have ever been inspected. Calls to the FDIC were not returned. The FDIC responded to my inquiry by saying that the Fed will inspect GMAC. And GMAC did lower their anti-competitive high interest rates on CDs after protests by none other than the American Bankers Association.
6. In December of 2006, GMAC appointed Mark Weintraub as their internal General Auditor. Mark is a past president of the Detroit Chapter of the Institute of Internal Auditors and a former partner at KPMG. He promised development of a world-class internal audit organization to his team and his IIA colleagues. Wonder how well that is working out…