U.S. Steers $3.8 Billion in Additional Aid Toward GMAC
GMAC Financial Services has already received $12.5 billion in government aid. On Wednesday, the auto and home lending giant got another $3.8 billion.
The new aid is less than the $5.6 billion that the troubled lender indicated it was seeking in November. With the lifeline, the third capital injection for GMAC since December 2008, the government will boost its ownership stake in the company to 56 percent from 35 percent, the Treasury Department said in a statement.
Even with the government upping its stake, Treasury officials said the government intends to stick to its policy of leaving day-to-day business decisions about financing to GMAC management, according to the AP.
The latest round of aid underscores just how critical GMAC is to the survival of the auto industry. Founded in 1919, Detroit-based GMAC provides financing for thousands of Chrysler and General Motors dealerships across the U.S. It provides financing to customers of both automakers as well.
The company has been hit hard by home-mortgage losses, though, losing $5.3 billion in the first nine months of the year. It was told to raise additional capital as part of the government-led stress tests of large banks earlier this year. However, of the 19 big banks subjected to the stress tests, GMAC is the only one to be shut out by private investors.