Ally Financial

Will GM Earnings be Driven by Channel Stuffing?

Submitted by Mark Modica on Thu, 04/18/2013 - 11:25

GM logo and Obama Earlier this year, I reviewed General Motors' first quarter earnings report and annual results. My take-away from the report was that GM relied upon shady accounting techniques and a build-up of US dealer inventories to produce some rosy-looking results. Channel stuffing to the tune of an over 20% increase in inventory from year end 2011 provided for GM's revenue growth. The trend continues as GM has further pumped-up inventory for quarter one.

Will GM Buy Back Ally Financial on the Cheap?

Submitted by Mark Modica on Thu, 03/14/2013 - 10:36

GM Ally logos I recently wrote about how government-owned Ally Financial was the only big bank that failed the Federal Reserve's stress test and how that ties in to General Motors' operations. The bailed-out bank formerly known as GMAC received about $17 billion of taxpayer money as part of the auto bailout (aka bankruptcy) process. It is now possible for GM, which relies on the auto lending unit of Ally Financial, to buy back the best segment of the bank on the cheap after taking advantage of the taxpayer largesse that saved the lender.

Bailed-Out Ally Financial Only Bank to Fail Stress Test

Submitted by Mark Modica on Fri, 03/08/2013 - 11:13

GM Ally logos The Federal Reserve's latest round of stress tests for the banking industry showed only one bank remaining on a shaky financial foundation. That bank was government-owned Ally Financial (the bailed-out company formerly known as GMAC), which also happens to be General Motors' prime source for financing.

More on GM’s Non-GAAP Earnings and $35 Billion Tax Benefit

Submitted by Mark Modica on Fri, 02/15/2013 - 08:59

GM logo/Obama Yesterday's earnings' report by General Motors threw up some red flags that I reviewed here. In recent quarters, the media seemed to give quite a bit of coverage on GM's earnings, but not so this time. I wanted to follow up and discuss what the financial news networks obviously will not.

GM's Mysterious Earnings Report

Submitted by Mark Modica on Thu, 02/14/2013 - 10:39

General Motors reported earnings today that appeared non-eventful on the surface. Upon further inspection there are some underlying concerns, including a glaring one-time event that stands out. That is an adjustment to earnings with a tax benefit (as opposed to paying taxes) of $35 billion for a "deferred tax valuation release." This was coupled with a goodwill impairment charge of about $27 billion, which allows GM to reduce the previously unusually high goodwill assets that were recorded on its balance sheet.

Dismal Sales for Chevy Volt in January

Submitted by Mark Modica on Mon, 02/04/2013 - 11:38

Chevy Volt Akerson photo January's dismal numbers for Chevy Volt sales may give a clue as to how successful (or not) President Obama will be in reaching his goal of having a million electric vehicles (EVs) on American roads within the next few years, a goal that is increasingly becoming unlikely. It also gives us a glimpse into a bizarre strategy General Motors has had by focusing so strongly on plug-in cars while they lose market share elsewhere. The numbers are in, and GM can proudly say that they are the market leader in an insignificant field with a paltry 1,140 Volts sold in January. The best selling passenger car on the road, the Toyota Camry, sold 31,897 during the month, giving an indication of how illogical GM's misguided focus has been.

TARP Watchdog Blasts Treasury on Bailouts

Submitted by Mark Modica on Wed, 01/30/2013 - 12:15

GM logo/Obama A watchdog for the government's bailout program, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), has hit the US Treasury Department with a hard combo of critique regarding some of the Administration's actions since pumping billions of taxpayer dollars into bailed-out companies like General Motors and Ally Financial (formerly known as GMAC). SIGTARP issued a report lambasting Treasury for allowing excessive pay for executives at GM, Ally Financial and AIG and followed that with statements that scrutinized Treasury's continued refusal to exit its stake in Ally Financial, which is currently 74% owned by the government.

GM’s New Electric Chevy Spark - More Green Insanity

Submitted by Mark Modica on Mon, 12/03/2012 - 09:41

Albert Einstein is credited with having defined insanity as "doing the same thing over and over again and expecting different results." Well, prepare for more insanity as General Motors is doubling down on green energy and plug-in cars after the disappointing sales results from previous entries into the field. The politically-motivated hype that we saw, and continue to see, on the Chevy Volt will be repeated. This time the over-hyped vehicle will be a Korean-made, all-electric Chevy Spark.

Bailed-Out Ally Financial Unit Comes Full Circle Back to GM

Submitted by Mark Modica on Fri, 11/23/2012 - 09:16

Ally financial girl The final pieces are coming together in the General Motors' restructuring puzzle as the company has, not surprisingly, won its bid to repurchase government-owned Ally Financial's European and Latin American lending operations. GM was forced to spin off all but 10% of Ally Financial back when it was known as GMAC.

Back in late 2008, the spigots of taxpayer money were open and GM had its cup out. In order for GM's lending arm (GMAC) to receive TARP funds, GM had to divest all but less than 10% of the company so that GMAC could be granted status as a bank holding company. Under President Bush's watch, the Federal Reserve approved the move and the company that is now known as Ally Financial eventually received about $17 billion of taxpayer money. GM itself would eventually end up with about $50 billion of taxpayer money, mostly distributed during Obama's term.

VIDEO: Bailed-Out GM's Future in Doubt

Submitted by NLPC Staff on Sat, 08/11/2012 - 12:00

NLPC Associate Fellow Mark Modica was interviewed by Tom Sullivan about GM's future on Fox Business Network on August 11. Here's a transcript: