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GMAC Gets New $7B Bailout

Treasury could double the injection as it moves closer to majority stakeholder

By Clay Dillow,  Newser Staff

Posted May 21, 2009 7:19 AM CDT
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(Newser) – The Treasury is prepared to inject another $7 billion into GMAC as the first stage in a new bailout that could double to $14 billion, putting the government on a trajectory to be the majority stakeholder in both GMAC and General Motors by year's end, the Wall Street Journal reports. GMAC, which provides fleet financing for dealerships as well as consumer financing for car-buyers, needs to increase reserves by $11.5 billion to offset exposure to troubled subprime lending assets.

What started as a $20 billion bailout for GM and Chrysler in December may now inflate beyond $50 billion and could approach $100 billion before year’s end, the Journal predicts. The Treasury has already poured $16 billion into GM, $12.5 billion into Chrysler and $5 billion into GMAC, while the Energy Department plans to guarantee $25 billion in loans to automakers to help them retool factories for low-emission cars.

Zero percent financing stickers are shown on Chevy Trailblazers at an Ostron dealer Tuesday Dec. 30, 2008, in Montebello, Calif.
Zero percent financing stickers are shown on Chevy Trailblazers at an Ostron dealer Tuesday Dec. 30, 2008, in Montebello, Calif.   (AP Photo/Nick Ut)
The General Motors Acceptance Corp. headquarters is seen in Horsham, Pa. The Treasury Department said it will provide $7 billion to GMAC Financial Services LLC.
The General Motors Acceptance Corp. headquarters is seen in Horsham, Pa. The Treasury Department said it will provide $7 billion to GMAC Financial Services LLC.   (AP Photo/Rusty Kennedy, File)
An American flag reflects off the hood of a Chrysler in the showroom of the Timberline Dodge Chrysler Jeep and Sprinter in Portland, Ore., Thursday, May 14, 2009.
An American flag reflects off the hood of a Chrysler in the showroom of the Timberline Dodge Chrysler Jeep and Sprinter in Portland, Ore., Thursday, May 14, 2009.   (AP Photo/Rick Bowmer)
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COMMENTS
Showing 1 of 1 comment
RobN
May 21, 2009 4:48 AM CDT
Anybody know why they allowed GMAC to qualify as a bank last year if it was going to fail a stress test only months later?

Second GMAC bailout in the works
New York Times

Government lurches toward majority stake in GMAC with second bailout
Boston Globe

Chrysler asks bankruptcy judge for emergency deal with GMAC
Houston Chronicle

 
Chrysler • General Motors • bailout • GMAC • financial crisis • auto bailout

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