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Old 02-03-2009, 11:53 AM   #1
AVANTI R5
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Default GMAC announces $7.46B profit

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NEW YORK (Reuters) -- Finance company GMAC LLC, which in December won a $6 billion government bailout, posted a $7.46 billion fourth-quarter profit on Tuesday because of a one-time gain from a debt swap, although its main operating units lost money amid slumps in the housing and auto markets.The quarterly profit compared with a deficit of $724 million a year earlier, and followed five straight quarters of losses.

Results included an $11.4 billion gain tied to a $21.2 billion debt swap designed to boost Detroit-based GMAC's capital.
This was offset by losses of $1.31 billion in its auto finance business and $981 million in its Residential Capital LLC mortgage finance business. The latter loss would have been higher but for a $754 million gain from the debt swap. GMAC's insurance business had a $95 million quarterly profit.

GMAC won a reprieve in December when the U.S. Treasury Department agreed to take a $5 billion stake, and General Motors Corp. (GM, Fortune 500) agreed to lend $1 billion.
The Treasury investment reduced the GMAC stakes held by GM, which had held 49%, and private equity firm Cerberus Capital Management LP, which held 51%.
http://money.cnn.com/2009/02/03/news...on=money_autos
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Old 02-03-2009, 11:58 AM   #2
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so it really lost money, but has a paper gain thanks to gifts from taxpayer money. lovely.
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Old 02-03-2009, 04:13 PM   #3
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quick somebody smarter than me explain to me what a debt swap is, I know its fishy and pretty much BS, but I dont really get what it is.
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Old 02-03-2009, 06:33 PM   #4
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Originally Posted by SCRAPPYDO View Post
quick somebody smarter than me explain to me what a debt swap is, I know its fishy and pretty much BS, but I dont really get what it is.
people buy bonds (debt), and are pressured to take stock (equity) instead, with the reason why they'd take it being that bonds would be renogiated and likely near-worthless if the company actually went into Chapter 11.

here's what GMAC did: http://www.philly.com/philly/busines...uity_swap.html
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Old 02-03-2009, 08:58 PM   #5
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wow, really...thanks for the explanation...I cant believe people would do that
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Old 02-03-2009, 09:07 PM   #6
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wow, really...thanks for the explanation...I cant believe people would do that
Oh, it wasn't just people, it was "We, the People..." AKA, your federal TARP funds at work.
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Old 02-04-2009, 09:18 AM   #7
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Oh, it wasn't just people, it was "We, the People..." AKA, your federal TARP funds at work.
[Admiral Akbar] It's a trap![/Admiral Akbar]









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Old 02-04-2009, 09:25 AM   #8
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I was saddened until WhiteKnight mentioned Akbar... that just cheers me up, dont know why
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Old 02-04-2009, 09:55 AM   #9
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I was saddened until WhiteKnight mentioned Akbar... that just cheers me up, dont know why
I've been waiting to use that line for sooooo long

Yes, I'm a geek.
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