Dear Prudence

Sometimes, a press release can be every bit as amusing as the
latest episode of Channel 4’s Peep Show – and just as comically
inappropriate, too. A recent missive from GMAC is a case in point.
“GMAC Financial Services and Team Focus Partner to Coach Children
on Money Management”, read the title, Team Focus being a community
outreach programme. Sharon Sayles Belton, director of community
relations at GMAC had this gem of wisdom to share: “Now more than
ever, young adults need to understand money management so they are
ready to make smart financial decisions when they enter

The irony of her words – in the same week that Moody’s pushed
GMAC’s long-term ratings even deeper into junk territory (see
Finance house’s rating cut), and its mortgage arm, ResCap,
announced a $60bn refinancing and funding package after it lost
$859m in the first quarter – is striking. If anyone needs money
management classes, perhaps it is the bigwigs at mortgage lenders
such as ResCap who, blinded by short-term profits, took their eyes
off the risk management ball and partially caused the current
meltdown. The borrowers who took on far more debt than they could
handle, based on the comforting assumption that house prices would
keep on rising forever, also played a part.

Whatever its causes, the credit crunch has caused major upheaval
for point-of-sale lenders; see our lead news story Lenders
take cover on all fronts
 for more. Fleets, too, have felt
the impact, as a vox pop survey of major lessors has found
(Fleets feeling impact of credit squeeze), but, as has
been the case for some weeks now, the major concern for fleet
providers and managers has been the astronomical cost of fuel,
which, unlike house prices, looks like it may keep on rising
indefinitely (see Fuel costs drive falling mileages).

The European Commission, meanwhile, has signalled that it is
considering relaxing the block exemption regulation in 2010 – and
perhaps scrapping it altogether. See news and our cover story for
the full story – and the implications for lessors and captive
finance houses.

Can it really be halfway through 2008 already? It’s been an
eventful year so far; let’s hope the second half is somewhat

Jo Tacon


 Motor Finance Issue: 44 – June 08
Published for the web: June 25 08 15:38
Last Updated: June 25 08 15:47