If you were listening to Andrew Wilkow on Sirius Patriot, you may have heard about General Motors' latest scam to make it appear like a healthy company. Taking a page from Fannie Mae and Freddie Mac, General Motors' financing arm is about to lessen its finance requirements in hopes of selling more cars. GM is considering making car loans for people with credit scores of 620 or less in hopes of increasing its sells.
Now wait a minute, aren't Americans still paying the price for these types of business practices? I mean after all, wasn't it Fannie Mae and Freddie Mac that lowered the standard for home loans and lent gobs of money to Americans who couldn't afford their homes in the first place? Remember the housing bubble? It didn't pop that long ago, and Americans paid and are still paying a huge price for housing bubble collapse. Now, General Motors, who is already funded by bailout money is about the repeat the sins of the past.
So what's going to happen is GM is essentially cooking their books to drive up stock prices in hopes of making it look like their bailouts are essentially paid off. Remember, the sell of government owned GM stock was supposed to pay off the bailouts, but failed to do so. Now they are going to increase their sales by lending money to people who wouldn't normally qualify and can't afford to buy that new Camaro, all to drive up GM's sales.
Guess who is going to pay in the end when these cars are recalled because payments aren't made. That's right, the American taxpayer. The real question at this point is whether or not the federal government will provide GM financial with a huge bailout with this does, and it will, fail.
