Elizabeth Warren: GMAC did not pose a systemic risk
So why did we rescue this institution with a massive bailout? Elizabeth Warren, who chairs the Congressional Oversight panel of the TARP program, doesn’t understand any more than taxpayers do. This is another example of the malinvestment and zombie finance which bailouts have fostered.
Here’s a question for you: if GMAC was a U.S. auto financing company, why was it speculating in mortgage finance… in Spain? That’s what I was asking back in July:
I would love to know what GMAC is doing in the Spanish mortgage market. Considering GMAC just got a second bailout in May, American taxpayers have the right to know what GMAC is doing and where.
Wrong country, wrong industry segment. It’s good to see Elizabeth Warren asking similar questions about the need to bailout GMAC in the video below. It runs six minutes.
Ah, yes, the Potemkin Village that has been made of Elizabeth Warren. When’s this gal going to realize that she only being allowed to run these investigations for the propaganda value? If Elizabeth Warren wants to do something for the American taxpayer she ought to look into leading a general strike. Other than that there will be no value realized from her analyses and her reputation building and, right now, that latter would mean she’s looking more and more the schlemeil.
As anonymous said, GMAC was everywhere. So I see them as an especially egregious case in the bailouts. The organization should be broken up and liquidated. They serve no purpose.
As for Warren, it was striking to hear someone grab the mike at the conference last week to tout a protest being organized on Wall Street (I believe in April). He challenged everyone on stage including Warren to go to this demonstration and show real support for grass roots action. Rob Johnson responded that he most definitely will be there. But he wrapped up the conference without anyone else getting a chance to respond.
Lavrenti, all things in due course. This is the equivalent of 1931 during the Depression years. Much more is left to unfold.
Hello Ed,
Interesting that you would mention this challenge to the assemblage made at the Roosevelt Institute Conference you attended last week. The danger with conferences of this kind is that the valuable information they provide becomes cause for intellectualizing and nothing more. The very persons most able to grasp the nature of the problems we’re experiencing are conveniently left to sigh over the sins of the nation without ever having to make a personal investment in a solution. That way, everyone can feel ever so righteous but face nothing in the way of consequences for the implimentation of their beliefs. And there just couldn’t be a more quintessenial example of Mario Procacchino’s fabled “limosine liberalism” than this. I’m glad the man stood up and hurled his challenge. I’d be interested in learning whether anything more than embarrassed shuffling came from it.
“This is the equivalent of 1931 during the Depression years. Much more is left to unfold.”
Reflecting on this observation of yours, it occurs to me that it can be placed geographically as well as in terms of time. The parallel I most frequently think of is early 1930s Germany owing to the deteriorating condition of democracy in both instances. The Weimar governments antecedent to the advent of Hitler were themselves increasingly less democratic, and all reflective of a growing public impatience with the regnant liberal political ethos. All of this was encourage by the parties of the right, the Nationalists and the NSDAP, of course. A similar and growing detestation of democracy exists openly in United States today where a plurality supports the use of torture, the routine infringement of civil rights and a provocative foreign policy. It’s not only the economics that are evocative, trust me.
GMAC, via ResCap (p.k.a. RFC), was in a lot of places, certainly more than just Spain. Heavy involvement in UK mortgages, German market, Canada, even some “distressed assets” type plays in Mexico. If you dig deep enough, you’ll see Spain was nothing compared to other foreign exposure.