The Spectacle Blog

Another Boondoggle Bail-Out

By on 1.1.10 | 7:56AM

The Obama administration hopes to reduce the deficit ... apparently after it bankrupts the Treasury.

Reports the Washington Post:

The federal government said Wednesday that it will take majority control of troubled auto lender GMAC and provide an additional $3.8 billion in aid to the company, which has been unable to raise from private investors the money it needs to staunch its losses.

The Treasury Department has said for months that GMAC would need more federal money, but the decision to increase the government's ownership stake came as a surprise, cutting against the grain of the Obama administration's recent efforts to wind down its bailout of large banks.

What initially appeared to be a closing act now looks more like year-end portfolio rebalancing, with companies including Citigroup and Bank of America allowed to repay aid even as the government deepens its involvement in mortgage financiers Fannie Mae and Freddie Mac -- and now, GMAC.

The government now owns majority ownership stakes in those three firms, General Motors and insurance giant American International Group. It also holds large stakes in Citigroup and Chrysler.

The additional aid for GMAC underscores both its struggles and its importance to the administration's efforts to revive the auto industry. GMAC, which already has taken $12.5 billion in direct federal aid along with other forms of government support, is the largest lender to General Motors and Chrysler dealerships and to their customers.

Well, with a $12 trillion national debt, at least $10 trillion more red ink expected over the next decade, and $107 trillion in unfunded liabilities for Social Security and Medicare--as well as who knows how many trillions more in debt if health care "reform" passes--what's another $3.8 billion among friends?

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