Kevin Colby: News, culture, political blog

Now here is a real bright idea!  Subprime borrowers may now be able to get a car loan through GMAC thanks to federal bailout money, according to The Detroit News.   This is exactly what happens when your beloved government doesn’t let these companies file for bankruptcy, but instead handout billions upon billions of your hard earned income to these companies so they can make idiot decisions.

On 24 December 2008, the Federal Reserve accepted GMAC’s application to become a bank holding company in order to gain access to billions of dollars in government aid, a crucial attempt to ensure the survival of the company. GMAC is in discussions with the Federal Reserve on accessing TARP related funding to resume providing auto financing to the American consumer, as reported by the Wall Street Journal.

I guess we haven’t learned our lesson yet.  You don’t give dirtbags any type of loans!  This is like going back to the future with the lowered lending standards that got us in trouble in the first place across so many credit markets.

Applicants with credit scores of less than 620 will now be considered. Of course, if you have terrible problems with credit, it’s probably not a good idea to take on a long auto loan.

It’s clear this is happening right now because car sales were absolutely decimated last month. GM sales were down 45%; Chrysler was down 39%; Toyota was down 39%; and Honda was down 36%. The auto market overall was down an average of 37%.

So the nearly $6 billion made available by the government is being used to make loans to people who may not be able to pay them back — all in an effort to try to move cars that aren’t selling off dealer lots.

This is a really bad freaking idea.  The answer to the lack of demand for these cars is not to go to the subprime market because these people in a very short time will not be able to make the payment and these cars will be coming back through repossession.

Some interesting articles to read:

Interesting articles to read from Clark Howard’s website:

Outrage over government backing GM, Chrysler warranties

It’s now been almost one year ago to the day that Clark made some comments about Chrysler that provoked heated response.

In short, the consumer champ questioned the company’s viability (while expecting them to go bankrupt) and predicted that their warranties would be worthless back in April 2008.  Read the full story.

Cul-de-sac bans as a new money-saving measure for gov’t?

The state of Virginia is banning the building of new neighborhood developments with cul-de-sacs. North Carolina and parts of Oregon are also seeking to do the same, according to The Washington Post.  Read the full story.

REOs remain the good news in a down housing market

CLARKONOMICS: The news on the housing market continues to be bleak, bleak, bleak. In just one example, the latest numbers from the Case-Shiller index show that home values in Phoenix are down almost 50% from their peak in July 2006.   Read the full story.

An early look at the price of gas in summer 2009

Where will gas be as we begin slowly approaching the summer of 2009? $3/gallon? $4/gallon?! How about between $2.25 and $2.35! That’s the latest word from The Houston Chronicle, which closely follows the oil industry.  Read the full story.

Some interesting articles from Clark Howard’s website:

Honda, Chrysler oversupply presents hazard and opportunity

CLARKONOMICS: One common measure of an automaker’s overall health is the days’ worth of supply they like to have on their dealers’ lots.  Read the full story.

Mystery 25-cent charges on credit cards around the nation

RIP-OFF ALERT: Have you seen a suspicious charge for 25 cents on your credit card recently? If so, you’re not alone.  Read the full story.

Health insurers’ customary charges to be revamped

Since the late ’80s/early ’90s, Clark has been receiving calls from people in dispute with their health insurers about “reasonable and customary” charges. This is a tactic used by insurers to shift costs away from themselves and onto consumers.   Read the full story.

Some interesting articles to read:

Some interesting articles from Clark Howard’s website:

Free e-filing for all through the IRS this year

Did you know that you can prepare and e-file your income tax completely for free this year regardless of your income? Last year the IRS had strict limits on who could use free tax prep software.  Read the full story.

Honda, Chrysler oversupply presents hazard and opportunity

CLARKONOMICS: One common measure of an automaker’s overall health is the days’ worth of supply they like to have on their dealers’ lots.  Read the full story.

Clark details his bidding secrets for upcoming Las Vegas trip

Clark and his wife are about to embark on a trip to Las Vegas thanks to some cheap airfare they managed to land. Though they’ll be going on a holiday weekend, they had no trouble finding bookings at hotels.   Read the full story.

One of the concerns that have been raised about the bailout funds is that the beneficiaries weren’t being forthright about how they were spending the money. While the agencies involved were cooperating with watchdog and auditing agencies, the banks and other recipients were stonewalling.

A letter sent January 7th by Neil Barofsky, the Special Inspector General of the Troubled Assets Relief Program, to Senator Max Baucus (D-MT), Chairman of Senate Finance Committee, discloses that the newly-approved agreements with Chrysler, GMAC, General Motors and Citibank contain binding agreements that require better disclosure. For example, the Citibank agreement provides the TARP IG access to Citigroup personnel and records and requires that the company disclose exactly how the bailout funds are being used.

The Treasury Department just released terms for the bailouts of General Motors and Chrysler.  The Taxpayers for Common Sense staff will be reviewing these documents.  Watch for any interesting updates.

Chrysler Term Sheet and Appendix (download pdf)

General Motors Term Sheet and Appendix (downloadable pdf)