I dont know how good of an idea it is to bank with a bank owned by GM as most analysts are saying at the current burn rate GM will file BK within 2 years and Bank of America analysts put GM in BK with 18 months. I am sure GM is borrowing money heavly from this bank they own. GM could be the biggest borrower and if they default on 1 of there loans that could make the bank insolvent.

I know the money is FDIC issured it still takes upto 6 months for FDIC to pay you if the bank fails. While you are waiting to get paid you do not accure any interest.

So is that risk worth .05% more?

dolmar said:I am sure GM is borrowing money heavly from this bank they own. GM could be the biggest borrower and if they default on 1 of there loans that could make the bank insolvent.


I think this is just incorrect. Have you looked at the balance sheet?

Aren't you the guy who was talking about Citibank and their vrdo's? I just pulled up the loan portfolio on GMAC at fdic.gov and, just for comparison, am posting it here next to Citibank's:

FDIC - Statistics on Depository Institutions Report

Cert - 35054 (GMAC Bank)
9/30/2005
% of Assets
Cert - 7213 (Citibank, NA)
9/30/2005
% of Assets

as % of assets GMAC Citibank, NA
2 Net loans and leases 95.68% 52.72%
3 Plus: Loan Loss Allowance 0.06% 0.94%
4 Total loans & leases 95.74% 53.66%
5 Plus: Unearned income N/A 0.18%
6 Loans and leases, gross 95.74% 53.84%
7 All real estate loans 95.32% 7.98%
8 Real estate loans in domestic offices: 95.32% 2.58%
9 Construction and land development 0.27% 0.08%
10 Commercial real estate 1.66% 0.30%
11 Multifamily residential real estate 0.00% 0.14%
12 1-4 family residential 93.40% 2.05%
13 Farmland N/A 0.00%
14 Real estate loans in foreign offices: N/A 5.41%
15 Farm loans N/A 0.07%
16 Commercial and industrial loans 0.01% 14.46%
17 To non-U.S. addressees N/A 11.40%
18 Loans to individuals 0.42% 17.21%
19 Credit cards 0.00% 6.76%
20 Related Plans N/A 1.77%
21 Other loans to individuals 0.42% 8.68%
22 Total other loans and leases * 0.00% 14.11%
23 Loans to foreign governments & official institutions N/A 0.17%
24 Obligations of states & political subdivisions in the U.S. N/A 0.03%
25 Other loans 0.00% 3.63%
26 Lease financing receivables 0.00% 1.12%
27 Of non-U.S. addressees N/A 0.47%
28 Loans to depository institutions and acceptances of other banks N/A 9.15%

Condition Ratios (%)
20 Loss allowance to loans 0.07% 1.75%
21 Loss allowance to noncurrent loans 195.20% 146.58%
22 Noncurrent assets plus other real estate owned to assets 0.04% 0.65%
23 Noncurrent loans to loans 0.03% 1.19%
24 Net loans and leases to deposits 201.53% 77.80%
25 Net loans and leases to core deposits 510.33% 353.78%
26 Equity capital to assets 8.40% 7.88%
27 Core capital (leverage) ratio 8.40% 6.25%
28 Tier 1 risk-based capital ratio 13.83% 8.45%
29 Total risk-based capital ratio 13.93% 12.65%

Basically 93% of GMAC Bank's assets are domestic residential mortgages of prime borrowers. I don't see that they have made any loans to GM. I still wouldn't invest GMAC Demand Notes, but the bank is fine. I have no money in this bank, but, by comparison, even in a world with no deposit insurance whatsoever, I would take it over Citibank and their $20 trillion derivatives portfolio in a heartbeat.

APY is currently 4.10%...leaving EmigrantDirect in the dust.

sandy05 said:Now even PayPal is paying 4.03%
Not FDIC...

Now 4.30%

OLEOLEOLEO said:As I said, I like GMAC's balance sheet better because it is transparent and traditional: almost exclusively home loans. It seems from their "unused commitments" line that they issue some short-term letters of credit, but that is the only question mark I see. By contrast Citibank is more highly leveraged, and, like Chase and BofA, has long seemed to me like just a big hedge fund. They hold over 2000% of their total assets (not equity...assets) in notional value of derivatives contracts. Surely those are mostly offsetting, but the point is I simply have no way of knowing that, and there isn't much margin for error if someone screws up.

Thoses short-term letters of credit are VRDN they issue and sell for GM. GMAC bank holds the SBPA(standby Bond Purchase Agreement) on them at par so in effect if GM defaulted on them and everyone holding them demand payment on there pricepal GMAC Bank would be forced to buy back all the notes at par. While you might be correct that the total % of theses letters of credits is a small compared to total deposits and loans that number could be in fact the amount of the unsold VRDN they hold in banks inventory as once the VRDN is sold the bank might not be required to show the debit on there books.

Not sure if you have ever invested in any of Citibank derivatives contracts they are made up of 60-70% bonds with the balance being stocks(including options or short). They Big banks play hedge game. They lend money short term and hold long term debit and when the yeild curve is not flat it is very profitable. On the same token Real Estate loans are unprofitable when rates are rising as most people dont re-fi homes at higher rates. So bank could have large portion of loans which are unprofitable as they are seeing there yeild curve flaten with even higher risk as home loans are consider a higher risk over investment grade bonds. Also remember long term rates could increase and correct the yeild curve and GMAC loans are fixed more than likely as most people dont keep adjustable mortgages while rates are increasing.

OLEOLEOLEO said:Just curious, but how do you know that these are a) VRDN and b) guarantees of GM debt? A lot of purchase agreements are only liquidity support, not credit support, so the underwriter has no obligation in the event of default.

I used to hold some GM VRDN back till about march when Muni VRDN became more atractive. So I know SBPA on GM VRDN is held by GMAC Bank as it was shown on the bonds. When I bought them I was explained by my bank that in the event of a default I could sell the bonds back to GMAC Bank at par with just loss of accured interest as the interest is paid on first Wednesday of month. Yes you are correct on Muni bonds SBPA is just for liquidity support because Muni VRDN also carry insurance and a letter of credit but for Corp VRDN they dont carry insurnace or letters of credit so GMAC Bank would ultimately end up holding the bag and have to wait for GM to pay back the money. Remember underwriters are ones truely lending the money and collecting a spread between weekly rate paid to bond holders and rate charged to Corp or Muni. If you look at Bank of America or Citigroup they dont underwite Corp VRDN at all most of the Corp VRDN are written by smaller banks owned by the larger Corps or brokerage houses as the banks themself consider them to high of risk to underwrite them.

Also if you look at most Muni VRDN underwritening they are not very large either compared to normal bonds and if the underwriten is over a couple of hundred million dollars normally the SBPA/insurance and letters of credit are spread out over 3-4 banks/brokerage houses.

I assume the bank could have lied to me about how SBPA works on Corp vs Muni except when Orange Country California defaulted back in the late 90's I was able to unload every VRDN I had at par without a problem. The only thing I lost was a couple of weeks of interest which I got paid on like 2 years later anyways. As opposded to long bonds I was holding I had to continue to hold for almost 5 years before they returned to par.

Forget one last thing only bonds that carry SBPA are VRDN. Normal long bonds dont carry SBPA which is why many times they will trade above or below par.

That makes no sense as you can have your home phone number switched to a cellphone or a cellphone number switched to your home line. Atleast in California you can as of Jan 1 2005

If, however, the Average Daily Balance of your GMAC Bank money market savings account is LESS than $500

The Monthly Service Charge for Direct Deposit Accounts will be $5.00 per statement cycle or
The Monthly Service Charge for NON-Direct Deposit Accounts will be $7.50 per statement cycle.

How long does it take to get the ATM card?


I used ID for my emergency money but if something came up I needed the money then not a few days later due to the ACH transfer. I've been using capital one for their ATM/check card but the CS sucks and so does the Site...