GMAC Set To Receive Another $3.5B In Bailout Funds
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GMAC Financial Services is expected to receive another $3.5 billion in U.S. government bailout funds, on top of the $12.5 the company has received since December 2008, according to a report in the Wall Street Journal.
The additional funds are being infused into GMAC in an attempt to return the finance company to profitability in the first quarter of 2010 and to help deaden the impact of it mortgage operations. The announcement is expected in the coming days.
The continuing willingness of the government to put money into GMAC shows the importance being placed on the company for the recovery of the auto industry. GAMC has been told to raise capital as a part of the stress tests conducted earlier in the year by the government.
"GMAC has been conducting a strategic review of its business and evaluating options to address the challenges in its mortgage operations," a spokeswoman for GMAC told the newspaper, while declining to comment on the specific bailout being proposed.
The government made it clear earlier this year that GMAC would receive the capital needed to sustain operations and return to profitability. The company has been unsuccessful in acquiring funds through private investors, unlike other banks that had participated in the stress tests.
"As we stated on November 9, Treasury is in discussions with GMAC to ensure its capital needs as determined last May by the stress tests are met," said a spokesman for the Treasury.
The Treasury was given the authority to make taxpayer money available to banks like GMAC under the government back Troubled Asset Relief Program that was instituted at the height of the financial meltdown. The TARP program has been winding down recently and the government has received repayment of $175 billion to this point.
The government currently holds a 35.4 percent stake in GMAC and another infusion will increase the taxpayer control over the bank. The government has the power to appoint members to the board of the company, while placing pay restrictions on compensation to top executives.
The additional bailout money will aid GMAC in not having to place its mortgage unit, Residential Capital, into bankruptcy, according to the Journal.
The additional funds are being infused into GMAC in an attempt to return the finance company to profitability in the first quarter of 2010 and to help deaden the impact of it mortgage operations. The announcement is expected in the coming days.
The continuing willingness of the government to put money into GMAC shows the importance being placed on the company for the recovery of the auto industry. GAMC has been told to raise capital as a part of the stress tests conducted earlier in the year by the government.
"GMAC has been conducting a strategic review of its business and evaluating options to address the challenges in its mortgage operations," a spokeswoman for GMAC told the newspaper, while declining to comment on the specific bailout being proposed.
The government made it clear earlier this year that GMAC would receive the capital needed to sustain operations and return to profitability. The company has been unsuccessful in acquiring funds through private investors, unlike other banks that had participated in the stress tests.
"As we stated on November 9, Treasury is in discussions with GMAC to ensure its capital needs as determined last May by the stress tests are met," said a spokesman for the Treasury.
The Treasury was given the authority to make taxpayer money available to banks like GMAC under the government back Troubled Asset Relief Program that was instituted at the height of the financial meltdown. The TARP program has been winding down recently and the government has received repayment of $175 billion to this point.
The government currently holds a 35.4 percent stake in GMAC and another infusion will increase the taxpayer control over the bank. The government has the power to appoint members to the board of the company, while placing pay restrictions on compensation to top executives.
The additional bailout money will aid GMAC in not having to place its mortgage unit, Residential Capital, into bankruptcy, according to the Journal.
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