Reports: GMAC in Talks to Receive Third Bailout from Government

The troubled 90-year-old company, which is a financier for thousands of G.M. and Chrysler dealerships around the United States, as well as millions of consumer borrowers, emerged from the government-run stress tests in May needing $11.5 billion in additional capital to stay afloat.

It was given a deadline of Nov. 9 to raise the necessary funds, some of which it obtained by giving the federal government special preferred shares. The shortfall – about $5.6 billion – was to be raised in the private sector.

But the company, which converted itself into a bank holding company last fall, was the only one of the 19 stress-tested institutions that could not raise additional private capital.

Looking to plug that gap, GMAC has now turned once again to the government for assistance. The Treasury already owns more than a third of GMAC after its bailouts in this past December and May, but any additional aid could give it a majority stake in the company.

Because GMAC is a primary financier for thousands of GM car dealerships, the company is considered crucial to the larger U.S. auto industry's revival. If dealerships cannot obtain financing from GMAC to purchase new models, they will be unable to fill their lots and attract new customers at a time when the auto industry desperately needs new business.

As car demand has plunged and the company's investments in subprime mortgage securities have gone sour, GMAC has posted losses in seven of the past eight quarters. In this second quarter of this year alone, the company lost $3.9 billion.

The Wall Street Journal, citing sources close to GMAC, says the government is unlikely to call for changes in the company's leadership as part of the third bailout deal. But according to terms attached to the second government bailout in May, the government could name up to four directors if its ownership stake exceeds 50 percent.

---- Compiled from wire reports and other media sources