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
GMAC Gets New $7B Bailout
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 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.
(Read more GMAC stories.)

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