When junk is not junk

Just eighteen months ago, you would have expected to see a story like the one excerpted below in The Onion, the satire news outfit that bills itself as "America's Finest News Source". But, this being 2009, this report($) along with others like it now appear in the Wall Street Journal, the nation's most widely read daily paper, recently surpassing USA Today.

GMAC Offers $2.9 Billion in Debt
Troubled consumer lender GMAC LLC came to the debt market with a $2.9 billion offering of three-year bonds backed by the government Wednesday.

GMAC is the only financial company with a junk credit rating to receive support under the Federal Deposit Insurance Corp.'s Temporary Liquidity Guarantee Program. Moody's Investors Service has the company rated at Ca, two notches above default. The FDIC backing, however, means these bonds will be rated triple-A.

The offering came as GMAC was in discussions to take another $2.8 billion to $5.6 billion of fresh capital in the form of preferred stock from the government. The Treasury already has pumped $12.5 billion into the company, which lost $3.9 billion last quarter and will post its third-quarter results next week.

"This offering further strengthens GMAC's liquidity position, which will support the company's ability to extend credit to consumers and businesses," the lender said in a statement.

No, that wasn't some made-up quote by a writer at The Onion - that was a real quote from a real spokesman at GMAC, the finance arm of General Motors and Chrysler that converted into a bank holding company last year so that it could better access government aid. This came a few months before both GM and Chrysler began what were two of the largest, shortest bankruptcy proceedings in history.