How GM Bankruptcy Filing Impacts GMAC and Ally Bank

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GMAC today issued a statement commenting on the filing of its once parent corporation General Motors.  The statement shows that while the financing company does have exposure to GM, bankruptcy will hopefully minimize the losses. 

Ally Bank, a bank that has been in the news quite a bit over the last week due to its high rates on savings and certificates of deposit is a subsidiary of GMAC.  Ally Bank was formerly known as GMAC Direct.

The statement on the GMAC site says:

DETROIT (June 1, 2009) -- GMAC Financial Services is a creditor of General Motors Corp. (GM) and as such is taking the appropriate steps to protect GMAC's interests during GM's restructuring.

GM has submitted a motion to the U.S. Bankruptcy Court that, pending approval, would allow its direct business with GMAC to continue in the ordinary course during GM's restructuring. In addition, GMAC has been advised by GM that GM will take appropriate steps in the bankruptcy court to authorize a purchaser of the assets to comply with all of the contracts with GMAC, including all payment obligations.

GMAC continues to provide automotive financing products and services to GM and Chrysler dealers and customers, including retail auto originations, wholesale financing, insurance products, and servicing of customer loans. The company's non-automotive activities also continue uninterrupted.

GMAC is a bank holding company with a newly appointed board of directors and a diversified ownership structure. GMAC has not filed for bankruptcy, nor does it intend to, and the company continues to meet all of its obligations.

The wording of this couldn't be more ambigious business-speak.  GMAC is a creditor to GM, meaning that it does have exposure. I'm guessing that the majority of the exposure comes from loans to dealers to purchase cars from the automaker (wholesale financing).  At the same time, the statement implies that the bankruptcy filing will ensure that GMAC is made whole for these transactions and will keep the financing relationship in place : "In addition, GMAC has been advised by GM that GM will take appropriate steps in the bankruptcy court to authorize a purchaser of the assets to comply with all of the contracts with GMAC, including all payment obligations."

So, for depositors of Ally Bank, this looks like a non-event for now. GMAC Finance issued a statement earlier today on an unrelated matter stating that the company was financially sound and had aqequate capital. 

I've contacted GMAC and will post any further information that I receive.


Delta Community Credit Union - Competitive CD and Money Market Rates

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Review of Delta Community Credit Union

Delta Community Credit Union is a state-chartered credit union, organized under the Georgia Department of Banking and Finance and federally-insured by the NCUA. It was originally organized to serve Delta Airline employees, but it now serves many other groups.

The credit union has a history of competitive rates on CDs, IRA CDs, HSAs, checking accounts and money market accounts.

Its field of membership includes members of the GettingAhead Association, an association that anyone can join with a small membership fee. Credit union membership is also open to employees of many companies and residents of several Georgia counties.

Links at Delta Community Credit Union's website:

 

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Citibank Offering 2.5% APY on Money Market in Boston

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I just got 2.5% on a money market from the Citibank branch on Boylston Street in Boston. I don't know if the rate is national but here are a few things I learned in the process.

I just got 2.5% on a money market from the Citibank branch in a suburb of Boston. I don't know if the rate is national but here is something I learned in the process about "new" money."

The minimum deposit was $25,000 which was fine because I had to roll-over about $100,000 from a maturing CD.  I had $50,000 coming due at Citi and $50,000 at another bank. At first they told me the 2.5% rate was only for new money which was ridiculous.  I was going to have to remove the $50,000 I had at the bank and replace it with another $50,000.  The woman at the bank also admitted there was nothing stopping me from taking the money, depositing it in another bank for a few days, and then brining it back.  No wonder these banks are having problems!

Eventually they relented and told me I could deposit the full $100,000, new money be damned.  So there's a lesson for everyone.  The banks may say new money but it's awfully difficult to enforce and when push comes to shove, most will relent.