If you thought the GM story could get no worse

GM using subprime auto loans to prop up sales.

“Is GM taking on more risk than is safe given our uncertain economy?” asks Edward Niedermeyer, TheTruthAboutCars.com editor-at-large. “They may be trying to goose short-term sales with subprime lending to boost its stock price, which is tied to the government getting out of its GM investment.”

GM still owes about $26.4 billion in direct aid to the federal government. The Treasury owns 26.5% of the automaker, or 500 million shares. The stock price would need to be 53 to recoup those taxpayer costs.

GM shares closed Friday at 19.67 after hitting a post-IPO low on Wednesday.

But don’t worry, it’s all good.  It’s all good:

Subprime lending in cars is not as risky as in housing. Car loans are cheaper, so customers have an easier time making payments. When they do go into default, the cars can be repossessed and sold to recover some of the loss.

 

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One Response to If you thought the GM story could get no worse

  1. Paul Marks says:

    General Motors is a sick joke – yet the Administration does not care, not as long as sales figures can be faked and the collapse of the company can be put off till next year.

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