GMAC Management - Bilking Taxpayers

One wouldn't know that GMAC was *bankrupt* reading stories like this:

March 1 (Bloomberg) -- GMAC Inc., the lender majority owned by the U.S. government, paid Chief Executive Officer Michael Carpenter $1.2 million for the month-and-a-half he was employed by the company last year. The next four top executives got 2009 pay packages valued at $4 million or more.

Carpenter, whose full-year package would have been valued at $9.5 million, got a salary of $119,726 and about $1.1 million in restricted stock, according to a regulatory filing today. The firm paid Chief Risk Officer Sam Ramsey $7.7 million and handed $5.7 million to Tom Marano, CEO of mortgage unit Residential Capital LLC. Finance chief Robert Hull got $4.9 million and Chief Marketing Officer Sanjay Gupta received about $4 million.

GMAC, the recipient of $17.3 billion in bailout funds, is subject to rules of the Obama administration’s special master on pay, Kenneth Feinberg. GMAC, based in Detroit, said Feinberg granted permission to pay Carpenter, who replaced former CEO Alvaro de Molina in November, as much as $9.5 million last year.

Marano’s 2009 base pay of $2.6 million was determined by GMAC’s board prior to the company’s restructuring last May, and wasn’t subject to Feinberg’s oversight. His 2010 pay package was modified to comply with Feinberg’s ruling, the company said.

How'd they get that $17 billion *bailout*?

Simple - the same way Big Military, Big Education, Big Banks, and Big Medicine do....rank *alarmism*. It'll be sooooo much worse if you (pols) don't take preventative action (read: fork over over money). Blah, blah, blah:

Feb. 25 (Bloomberg) -- Bankruptcy for GMAC Inc., the auto and home lender majority owned by the U.S. government, would have cost the government as much as $50 billion, the Treasury Department’s lead auto industry adviser said.

Sending GMAC into bankruptcy would have required the government to inject $40 billion to $50 billion into a newly formed company that would then lend to General Motors Co. and Chrysler Group LLC dealers, said Ron Bloom, chief adviser for the Treasury’s auto task force. Bloom spoke today at a hearing of the Congressional Oversight Panel in Washington.

At the end of December, GMAC received $3.8 billion in a third installment of government money. GMAC got $12.5 billion in two previous bailouts and almost $1 billion that was funneled through GM, which used it to invest in GMAC.

GMAC Chief Executive Officer Michael Carpenter told the panel the lender is "unlikely to require additional capital." Chief Financial Officer Robert Hull also testified today, saying the $20 billion in equity the company has on its balance sheet shows it’s solvent.

GMAC posted a $10.3 billion loss last year, driven in part by defaults on home mortgages. Analysts testified today that the best solution for GMAC and General Motors would be to place the lender into bankruptcy and sell the auto-financing business back to GM, which may suffer without its own in-house lender.

Going back to that first article for a second...

Someone tell me why *risk* and *financial* officers should be paid $5 million in annual salary when all they really did was procure billions from Uncle Sam?

I guess I'd feel more comfortable with their compensation if at least they were more aptly called *lobbyists* or something.

And recall that Thomas Marano who reaped $5.7 million last year - he has quite a blemish on his resume.

Marano was the face of Bear Stearns' mortgage division; he spent 25 years there before his division sent the century-old investment bank into bankruptcy. So it's not just that he shouldn't have been paid $5 million last year to rob taxpayers, it's that he shouldn't have even been hired in the first place!

I don't care, in my book, if you take down an entire investment bank you should be *out of the game*.

Recall also that Marano brought along that meathead Josh Weintraub whom I ripped nicely on this blog - so nicely that his relatives took to the comment section to defend him.

See:

Bear Stearns Run By Meatheads

Josh Weintraub - Round 2 With The Meathead

I Am A Lamb At The Teat

Josh Weintraub Hasn't Helped GMAC - So They Promoted Him

We Spend Too Much On Cars Anyway

Shouldn't *strategic support* imply actual lending?

From Bloomberg,

GMAC said yesterday it's granting financing only to buyers with scores of at least 700, who represent about 58 percent of U.S. consumers.

A credit score of 700?

I just ran mine a few months ago on one of those free sites. It came it at a mere 690.

Meanwhile, my landlord owes $4,000,000 on four upside-down homes, has no income, has been audited recently (resulting in a 20k fine), and yet his credit score is something like 730.

I have no debt whatsoever - no student loans, no car payments, no mortgage, and nothing on the credit cards.

But my landlord told me he keeps a $5,000 balance on his American Express card and makes slightly-more-than-minimum monthly payments. He told me this was all that was needed to *manufacture* a healthy credit score.

So today he could get an car loan from GMAC while I couldn't.

If any of y'all can't lease your usual fancy new car, remember you can always plunk down a grand or two for a clunker.

Even though the system of credit scoring is a joke, this *credit tightening* has got to be disaster for the owners of GM car dealerships.

Yeah, GMAC's doing real well these days. Must be that star-studded Bear Stearns team they brought in...

Josh Weintraub Hasn't Helped GMAC, So They Promoted Him

From the Wall Street Journal,

ResCap Under Duress in Derivatives

Mortgage lender Residential Capital LLC's value in the credit markets is like that of a company on the verge of taking its last breath.

ResCap, parent GMAC LLC, and General Motors Corp, which holds a 49% stake in GMAC and reported abysmal earnings Friday, are also under duress in the $62 trillion derivatives market.

Derivatives investors are now paying $7 million up front to insure $10 million of ResCap's bonds, plus $500,000 annually for five years based on credit-default-swap levels. This high cost is extreme but not out of context considering the going value of ResCap's bonds outstanding.

ResCap's junk-rated 8.375% notes due in 2010 were valued at all of 29.5 cents Friday. Other bonds, such as the 8.5% notes due in 2012 and the 8.875% bonds due in 2015 traded as low as 25 cents on the dollar, according to KDP Investment Advisors.

But guess what? Eerily mirroring his *rise* at a sinking Bear Stearns, Josh Weintraub was just promoted at foundering GMAC!

It didn’t take long for the ex-Bear Stearns mortgage hands to move to the front of the pack at Residential Capital, LLC, with GMAC Financial Services announcing Tuesday that Thomas Marano had been named chairman and chief executive officer, effective immediately, replacing current CEO Jim Jones.

ResCap also said it had promoted Josh Weintraub into the role of ResCap vice chairman; Weintraub joined the company along with Marano, so his rise shouldn’t come as a surprise.

I am actually still laughing at that article that I referenced which called Tom Marano a "mortgage whiz". For crying out loud, these clowns bankrupted an 85 year old investment bank with their wizardry.



I guess if your ship is destined to sink, as GMAC is, why not hire the crew from the Titanic?

Now obviously I don't have much on Josh Weintraub today - though a couple of his high school classmates have recently emailed me some *dirt* on him. But I just had to pen another blog on Josh because, well, his family frantically checks my blog almost everyday to see if there are any more comments on their golden child - I guess.

Or perhaps they've been smitten by my wells of insight and wit?

I Am A Lamb At The Teat...

...according to Mr. and Mrs. (Josh) Weintraub.

Read the comments of my prior post.

I don't know why any clear-headed person would be so eager to trade invective with me.

They get a pass - for now - because there are far worse things in this world than loving, delusional parents.

But I just don't see why, if Josh Weintraub was such a hardworking, intelligent trader then why didn't JP Morgan Chase consider him an asset worth keeping.

Can you imagine that after presumably 10-15 years in the mortgage arena, after all his success, that another bank would essentially say, "We don't see any role for you in our mortgage business"?

Ironically, that would almost be like looking at a nationally accomplished mathlete and trying to stump him with fourth grade arithmetic!



Jeez, how hard would it be for me to conceive an animal analogy for mortgage traders at Bear Stearns?

Josh Weintraub - Round Two With The Meathead

My post Bear Stearns - Run By Meatheads has drawn quite a few hits - as I predicted it would. From my tracking software, it was clear that the magnetic target was "josh weintraub", the meathead.

I got hits from numerous people in the NY area specifically googling him. No doubt - it was his friends, family, enemies, co-workers, and definitely the meathead himself.

Today I find out he's been hired to sit on the board of ResCap - which is GMAC's teetering mortgage company. (link)

I predicted the following about GMAC back in January (link):

Countrywide is on the cusp of bankruptcy. Greenpoint shut down in August. And WaMu is obviously tracking in the same direction.

GMAC will be the next to go belly up - I've heard as soon as this upcoming May.



Well, yesterday ResCap/GMAC had its ratings slashed by Moody's:

The agency said it had cut ResCap to "Caa1," its seventh-highest junk grade, and in turn that it had also cut the rating of corporate parent GMAC to "B2," its fifth-highest junk rating.

GMAC was spiraling down the toilet anyway; BUT Moody's probably saw the hiring of two Bear Stearns guys (Weintraub and "mortgage whiz" Tom Marano) as the catalyst for this additional downgrade. After all, the ratings agencies job is ostensibly predicting these failures IN ADVANCE.

Now back to my job. The purpose of this post is - predicting history in the making.

ResCap/GMAC might make it past May, but it has little chance of survival into 2009. THEREFORE, Josh Weintraub will most likely have presided over TWO massive, ginormous bankruptcies in a single year!!!

Somebody call the Guinness Book of Morons.

By the way, I also found this video of Josh boxing in November. They were happier days to say the least. Note the profane, Neanderthal toadies cheering Josh on. See what I mean about Bear Stearns, having been run by "meatheads"? They don't hire intelligent people on Wall Street - they hire nephews and fraternity brothers. Anyone who's ever worked in Lower Manhattan is well aware of this long-standing policy.

(Hi, Josh. What do you think of my blog?)

Ambulance Chasing At Bear Stearns

From CNBC:

I have to give a shout-out to Ray Schmitz, an associate broker at Coldwell Banker Previews International in New York City.

A week ago last Monday, when several employees of Bear Stearns Bear Stearns Cos were leaving the building with cartons and plants, Schmitz was standing outside the building, handing out his business card.

"There were some people who were not happy about their own circumstances,” Schmitz told me this morning, “and sure there were people who didn’t want to talk to me and some who didn’t want to look at me."



What next? Are divorce lawyers going to start whipping out their business cards every time they see a couple argue in a restaurant?

I wouldn't put it past them.

This Bear Stearns thing reminds me of my own serious car accident. About nine years ago, after the car I was in was pulverized by another and wrapped around a telephone pole, I laid sprawled out, immobilized on the backseat when some lawyer reaches in, before the paramedics, and handed me his business card. I wish I kept it so I could post his info here. Furthermore, of course the guy that caused the accident admitted, later on in legal proceedings, that he met his legal counsel randomly in the hospital. SURE it was "random". They are total scumbags, the lot of these PI lawyers.

Anyway, it's a wonder that some meathead from Bear Stearns didn't reach out and punch the real estate jerk.

There's a major difference between say my harmless brand of mental schadenfreude and the in-your-face commercial variety.

Bear Stearns, Run By Meatheads?

Sorry for the poor chart. Click to enlarge.

This was the wild ride last Friday morning for Bear Stearns, an erstwhile major investment bank rumored to have "liquidity issues".

Where do you think I sold the BSC that I bought Thursday at $51.69?

Alright, I'll tell you. God forbid I tax your brains.

I sold it at $58.40 a mere 10 minutes before the spike (see the intraday chart above). I cursed myself for all of five minutes. Then after the nosedive began, I started tooting my horn. Bear Stearns closed the day at around $30 a share - well below the boundary of my chart.

Then this weekend, in lieu of filing for bankruptcy, sold itself to J.P. Morgan Chase for a whopping $2 a share.



There are plenty of other places to read and discuss the debacle. Find them on your own if so interested/ignorant.

I just wanted to offer this one little anecdote about Bear.

Now, fortunately I don't have any friends that work there. Though one of my wife's former bosses "just went to work for Bear Stearns" (it'll probably be a short-lived tenure as rumor has it that JPM is planning to reduced headcount by 50%).

But I did interview for a job at Bear about 6 years ago. In fact, the job opening was on the mortgage desk - the very desk that brought down the firm. For the interview I met with three gentlemen. The first two rounds went well, but then I met the honcho - Josh Weintraub.

This unmitigated a**hole came in, took one glance at my resume and snapped, "You're strong at math, huh?" He looked up, "What's eleven sixty-fourths of $27 million?"

I answered, the best I could off the top of my head. Then he asked me another one, and another one and another one, "What's twenty-three thirty-seconds of $61 million?". I might very well have gotten them all wrong; he was going so fast and demanding quick answers, I couldn't remember.

After this display of his superiority, he asked me a few things about my experience, patronized me some more, and abruptly left. Suffices to say, he didn't hire me, which was fine. At least I got to speak to three different people. I've had more frustrating job hunting experiences where the interviewers didn't even ask me a single question. I've also had my time wasted by job postings and interviews where there was clearly never an intent to hire anyone.

Supreme arrogance is not something that I can't handle - thanks to six years in a trading pit with lowest multi-millionaire scum of the earth. But what irritated me about Josh Weintraub was that he could see my math creds and my pit-trading experience yet he deliberately tried to fluster me. So he was fluent in sixty-fourths of large numbers - I bet if I asked him what 7 7/8 - 2 11/16 + 5 1/2 - 13/16 was, he wouldn't be able to compute so rapidly or accurately. (At the time, that would be the quick math an option floor trader would be proficient at.) The fact is, nobody can do the rapid computation right away - it takes practice. To put it mildly, there is nothing about my Olympian math credentials that should ever make another human being question my quantitative abilities.

My pachydermal memory may have even forgot this egomaniac if I hadn't 1) seen him in Trader magazine recently and 2) been thinking about Bear Stearns amidst it's demise.

The Senior Managing Director of Mortgage-Backed-Securities recently flexed his ego and muscles at some Wall Street charity boxing event. Good for him!



Now, let me ask you a question: From a profiling standpoint, does this big shot look like a savvy, intellectual who's competent to to be juggling billions of investors monies?

Or does he look (and sound) like some Cro-Magnon, meathead footballer you hated in high school?

They say that 30% of Bear Stearns' stock is owned by its employees.

Here's hoping that Josh Weintraub was arrogant and stupid enough to own just a few too many shares. I should email him,

Hey Josh, real quick, no paper, what's eleven sixty-fourths of your personal net worth?!?!?!



In all frankness, with the billions of losses Bear posted in 2007 and all the lost brokerage assets (starting in August), why the heck didn't Bear fire its head of MBS Trading?

Because he could box?

Sure, it must have been someone else's fault.

If you think I am being pretty harsh on a guy based on some 5 minute interview years ago, then you are probably right.

Though, in fairness, he was gratuitously rude to me back then.

And, if you find my schadenfreude towards a guy who likely helped obliterate the net worth of 14,000 of his co-workers (not to mention shareholders) to be a little overdone, than you ought to head over to the comment threads of Calculated Risk.

The denizens of that blog have an unsettling fetish for the misery of others.

I drop in there once in a while just to make myself feel charitable.