Monday, June 1, 2009

ABA Accuses GMAC Of Unfair Depositor Poaching, GMAC Retorts, Hilarity Ensues

In one of the lesser noticed scandals over the past week, the CEO of the American Banker Association Ed Yingling (presumably not related to the fine, fine beer) accused GMAC essentially of using TARP money to fund its subsidiary Ally Bank in order to advertise/provide markedly higher deposit interest rates than prevalent market rates. The last is in violation of a May 29 decree by the FDIC, barring weaker banks from paying interest rates out of line with local markets to keep lenders from taking on excessive risk. Long story short, GMAC, troubled bank extraordinaire and proud recipient of beacoup TARP bux has been doing just that, and the ABA would not take it any more, sending a missive to the one and only Sheila Bair, complaining about this injustice. Of course, Sheila who is busy backstopping the entire western world's financial system couldn't give a rat's ass about this particular problem, however, one person who did was Al de Molina, CEO of GMAC.

Taking Yingling's criticism down the wrong path, de Molina concluded snidely: "You might want to assist your members in figuring out how they are going to compete in the new market place rather than ask regulators to direct Ally Bank to pay its depositors less competitive

Just goes to show the petty bickering going on, while behing the scenes zillions in taxpayer money is slowly being funneled not merely from depositors to weaker banks, but from taxpayers to asset managers and CEOs of companies that would have long since ceased existing in a fair and efficient market.

For a bit of humor in our troubled, manipulated and bizarro times, peruse the letters below: the first one is from the ABA, and the GMAC response follows.

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