While GMAC LLC struggles to raise $30 billion from its bondholders - Inquirer story here - so it can qualify for a taxpayer-funded bank bailout, investors holding $25 billion in uninsured GMAC SmartNotes can only watch and hope they don't lose their investments. GMAC employs almost 1,900 at its Horsham-area offices. Bloomberg story here.
Two much smaller Philadelphia-area companies, American Business Financial Services and Walnut Equipment Leasing Co., used to issue similar notes. Both firms financed loans by selling what amounted to uninsured certificates of deposit at attractive interest rates. Both were unable to keep paying when markets turned against them, leaving buyers with dimes on the dollar.
Beverly Santilli, wife of the late American Business founder Vince Santilli and a former manager at American Business, is back in the lending business as Alternative Business Credit LLC.