General Motors’ $3.8 billion all-cash acquisition of subprime lender AmeriCredit Corporation set the auto and investment worlds abuzz last week as the carmaker announced its first major transaction since its $17 billion government bailout.
Critics are split on whether the acquisition, which reestablishes a lending division at GM, was a wise move for the auto giant. Purchasing a subprime lender poses a risk to GM, a 61 percent government-owned company that hasn’t repaid any of its bailout money. It was lending to borrowers with poor credit histories, after all, that helped cause the Great Recession, the Wall Street Journal wrote. Still, the purchase enables GM to compete with Toyota and Ford, both of which have their own auto financing units, according to The Street.
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