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

Foreclosure Confirmed!

This morning, as I was doing my calisthenics in the living room, I saw a car pull up in front of my house.

A rather large, unfeminine, shabbily dressed young lady got out and took a few quick pics of the front of our (rented) house. Then she jumped right back into her car.

I sent my wife out for a hello/interrogation - even though I had a pretty lucid inkling as to what it was all about.

The woman confirmed that she was hired by GMAC, and that this house was *under foreclosure*.

Unfortunately she couldn't offer any insight about *when* the house would go to auction, i.e. when we'd have to leave.

My understanding is that according to Massachusetts state law, we can stay for 60 days AFTER the house is sold at auction. So we may have a while yet, or not.

Either way, my wife and I have decided that tomorrow's rent will probably be the last we pay (minus the bill for pest control). Remember, our crumb landlord has $5,000 of our money still - or he HAD it and illegally co-mingled it with his other assets/losses.

Note that since GMAC is a bailed-out entity....I'm essentially living in government housing!

I wonder how my buddy Josh Weintraub is doing over there anyway?

Listening To Experts Can Hurt

Every year Forbes magazine sponsors an *investment cruise*. I am sure it costs over $10,000 per couple.



Then of course, the additional cost will vary depending on how much stock you bought from expert recommendations.

The table above gives a 1.5 year summary of the *expert picks* performance from the 2007 cruise. Only one stock is currently higher! And most of them are down huge.

I can't find the quote right now, but if memory serves me, CROX - down 90% - was the recommendation the *experts* universally agreed upon.

Ouch!

Oh yeah, the *experts* also recommended GMAC bonds! Here's a recent article on their *25 cents on the dollar* performance.

Ouch!

Though in fairness to the experts - there's no way they could have known Josh Weintraub was going to come aboard...

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?

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?)