REPORT: GMAC likely to get more cash soon from federal government
Back in May, the government loaned GMAC (which has been converted to be a bank holding company in order to be eligible for TARP loans) $7.5 billion while also taking a 35% stake in the company and appointing two directors. The new loans will likely mean that Uncle Sam will take a larger stake in the company.
On the surface the loans look like another huge helping hand for GM, but the situation is quite a bit more complicated than that. $4 billion of those dollars were loaned to GMAC to assume some of the loans given by Chrysler Financial, which will cease to exist by 2011. GMAC has taken over primary vehicle lending for Chrysler dealers as part of the Pentastar's bankruptcy. GM also sold 51% of GMAC to Cerberus Capital Management back in 2006, so the General hasn't even been a majority owner of its finance company for well over three years.
[Source: The Detroit News]
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