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*Note To Our Friends and Supporters:  I personally want to thank the many people who have been so thoughtful and encouraging with their overwhelming response of emails. Your advice and information has been extremely helpful in your effort to explain how you view this serious matter of defrauding the transportation system and the American people.  This support was surprising but is very welcome and I invite you to keep up your communications with us. The Toyota situation that we have all been reading about is due to the coordinated efforts of people like you who bring the truth to the American people. Like Toyota, Nissan has tried to hide their problems and point fingers at others. The American people have woken up. Please make every effort to contact your representatives and tell them driving a Nissan could be as dangerous as a Toyota. These problems can not go away with a slap on the wrist and only a minor monetary penalty. US lives have been lost, our automobile industry has been decimated to the tune of Hundreds of Billions of dollars, and taxpayers' money has been awarded to companies that have destroyed our economy. The conspiracy to cover-up the crime is always greater than the crime itself.  KEEP UP THE GOOD WORK!  

GMAC and Cerberus Capital Management

A Surprising Story

Note:  Many people are quick to criticize GM and Chrysler for taking government money and going into bankruptcy. This story about GM selling a company, GMAC, and the terms of the transaction reveals the actual motives of the companies involved and the surprising introduction of the Japanese into the transaction.  It changes the story of GM’s intentions and the fight for the company to survive ensues ending in taking government money.  It also is part of Toyota's rise to be the Number One car company in the world.

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GMAC originally a part of General Motors (GM) was founded in 1919 as a wholly owned subsidiary of General Motors Corp.  The official history of the company states "GMAC was established to provide GM dealers (6,450) with the financing necessary to acquire and maintain vehicle inventories and to provide customers a means by which to finance vehicle purchases. GMAC operated in 40 countries around the world and provided financing to 75 percent of GM dealers. The company's products and services have expanded through the years to include insurance, mortgages, online banking and commercial finance."

This relationship with GM was the secret of helping to make the car company the Number One car company in the world until 2008 when it was overtaken by the Japanese company, Toyota which has now recalled more than 8.5 million of its cars and trucks which have severe mechanical and electrical problems.

GM originally sold 51 percent of GMAC to Cerberus Capital Management in November 2006 to help stabilize GM in a bad economic time in the US.   The car market in the U.S. and around the world was very rocky.(1)  At the time, Steve Feinberg, Chairman of Cerberus promised Rick Wagoner, CEO of GM that the company could repurchase GMAC within three years when GM expected the business to be better.  However, that apparently was not the intention of Cerberus.  Feinberg did not wait three years to help destabilize GM.

When the majority stock of GMAC was purchased one of the investors was Aozora Bank in Tokyo.  That bank was the Old Nippon Credit Bank which had been nationalized by the Japanese government.  At the time, Cerberus owned 37 percent of the bank and Dan Quayle, former Vice President of the United States was on the Board of Directors of Aozora Bank. 

The bank quickly lost $150 million in GMAC and protested to Japanese Bank regulators who in turn made it uncomfortable for Cerberus so the company invested $8 billion more in the Aozora bank giving Cerberus a 45 percent ownership in the bank.  During this time Aozora bank incorporated at least two companies with GMAC in Delaware.  Today, Cerberus owns 55 percent of Aozora Bank.

After GM sold GMAC the economy in the U.S. and the world became worse.  GMAC then needed more funds.  GM was having a difficult time with stories of a potential bankruptcy which eventually did happen.  A very strong reason for GM's difficulty was, according to the Wikipedia history of Cerberus Capital Management "was due in large part because Cerberus had raised the credit requirements for car loans so high, virtually eliminating leasing, that they have been responsible for a sizable chunk of lost sales at GM due to customers inability to secure financing, in order to pressure GM into selling or trading their remaining stake in GMAC."(2)

Cerberus actions holding up the financing in GMAC affected the sales in 75 percent of GM which effectively put the company over the edge needing financial help.  It also affected GMAC which had sought to become a bank holding company but no longer had the necessary funds.  At this point the U.S. government came forth with funds and GMAC ultimately became a bank holding company. 

Cerberus' holdings in GMAC were reduced to 33 percent of total equity of GMAC and 14.9 percent of voting stock at the time the company became a bank holding company.  In having to disperse their holdings Cerberus distributed their shares in GMAC amongst the co-investors in Cerberus.  The investors would have control of their own stock that Cerberus was distributing.   One of those investors was the Japanese bank, Aozora Bank.  Feinberg was on the Board of Directors of GMAC.

GM's interest in GMAC shrunk to a 10 percent stake which was placed in a trust and the stake had to be disposed of within three years.   So in effect GM no longer had a stake in GMAC but Cerberus and it's Aozora Bank were the big winners.

The fiscal gyrations of Cerberus in raising the credit

limits requirements for car loans so high that customers could not secure them or qualify for them helped financially compromise GM by affecting the dealers for GM as well as their customers.

More importantly it prevented the completion of car sales for GM so this requirement was "responsible for taking away a sizable chunk of "lost sales" for GM" according to the Wikipedia.

It was at this time in 2008 that the Japanese company Toyota won its goal and overtook GM as the largest car company in the world.  Was this coincidence or was it planned since Aozora Bank was one of the investors in GMAC and had set up at least two companies with GMAC in the U.S. in the State of Delaware?  Was this the original real intention of Cerberus since the Japanese bank regulators had objected once before when losing money on GMAC?  With ownership in the bank Cerberus must work directly with the Japanese government on their wishes and dictates.  This

puts America second, because 55 percent ownership of a bank is a large chunk of money. 

Unfortunately, GM was the victim in this transaction and so were the American dealers of GM and their customers.  All American citizens lost by the maneuvering around GMAC because the company was an essential part of the National Defense Industry with GM, Ford and Chrysler.  Through Cerberus Capital Management we also lost Chrysler to foreign control with FIAT managing that company.  Rick Wagoner, CEO of GM also lost because he was called to the White House by the President and fired.

It is time to wake up America and ask and examine who is buying our companies and what their intentions are.  We need to build a strong country for our children for opportunity for a better life and we need to remain strong in the world, not weakened by selling out our assets and companies.  The future we create is up to us and our actions tell you whether we stand for America or chase only "the buck".  You must make your choice.  I personally stand for a strong America and so do my friends. 

1. Bloomberg.com:  Cho Says Japan Carmakers’ U.S. Sales Won’t Hurt Trade (Update 2) May 26, 2006.  Koji Endo, an analyst at Credit Suisse stated, “Toyota earns about 60 percent of its operating profit on sales minus expenses and the cost of goods sold in North America, Honda gets about 70 percent of its operations from North America, while Nissan Motor Company’s North American business accounts for 74 percent of the company’s operating profit.

2. Stabbing Detroit in the Back, January 2010, Explaining the Japanese Car Industry, “The fact is that Detroit would probably have retained its lock on the Japanese market indefinitely had not the Tokyo government in the 1950’s launched a Herculean effort to “target” cars as a major growth industry.  There then followed a massive ramp-up of investment as the Japanese establishment set to work with great purposefulness (and not a little guile) to break America’s then seemingly unassailable competitive advantage.  For two decades the Japanese ramp-up went unnoticed in the United States.”

Mike Biras

mbiras64862@mypacks.net

Feb. 16, 2010