• Dec 30th 2009 at 1:31PM
  • 23
When the U.S. government conducted bank stress tests earlier in the year, one of the financial institutes that didn't pass the mid-term exam was GMAC. At the time, the government told GMAC that it would need another $5.6 billion to weather another economic calamity, but the Detroit Free Press reports that the final number will be actually be $3 billion (The Wall Street Journal is reporting $3.5 billion). The money will reportedly come courtesy the $700 billion TARP fund that kept Chrysler, General Motors and many banks afloat during the worst days of the recession. GMAC has already received $12.5 billion from the federal government.
GMAC, which is now 35-percent owned by the federal government, now controls financing for both GM and Chrysler. GMAC spokesperson Gina Proia declined to discuss any cash infusion due to the fact that the government hasn't officially announced anything, but she did add that the financing company "has been conducting a strategic review of its business and evaluating options to address the challenges in its mortgage operation." An official announcement is expected later today or sometime Thursday.

[Sources: Detroit Free Press; The Wall Street Journal]


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  • 23 Comments
      Rena
      • 5 Years Ago
      THE WORST CAR I EVER PURCHASED IS A 2002 CADDILAC.....GM LOST ITS WAY LONG TIME AGO
      • 5 Years Ago
      theyre at it again. lemme tell you, this congress gets a 10/10 in spending our money. they do that very very well
      • 5 Years Ago
      Look at this point this is nothing but politics. Government can not allow GMAC to go bankrupt because opposition will claim that they were right all along and that this was money down the drain. I believe GMAC recently replaced its CEO to show that they are doing something, but at the end of the day it is still the same company that is losing money.

      The big banks are actually making money, i believe most already have re-paid the loans and the government actually made a profit, but with GMAC and auto sector in general the money is lost.
        • 5 Years Ago
        @Sea Urchin: "Wow, i still have 2 stars?"

        Fixed. Sorry it took more than 9 minutes this time because of the holidays.
        • 5 Years Ago
        @Sea Urchin: Government can not allow GMAC to go bankrupt because opposition will claim that they were right all along and that this was money down the drain.

        Thanks for catching up with the rest of us who predicted exactly that before this administration poured bazillions into the sink hole*

        (* and, no, GWB had nothing to do with this. The prev admin - after getting approval from the Office of the president Elect - gave bridge loans that had to be repaid with specific conditions or BK. The Bam forgave those loans when they missed their targets, gave them a couple of more chances, and then created new BK law from thin air that obliterated bond holders [first time in history] and bequeathed ownership to the UAW [another first!]. That's Hope and Change You Can Count On.)

        ps. no thanks for branding all disagree'ers (who, surprise!, you now agree with) as "the opposition", but we've suspected that's how you viewed us since the start...
        • 5 Years Ago
        notYou:
        This isn't even close to the first time bond holders were left holding the bag in a bankruptcy. It happens all the time. That's why bonds pay interest and there are bond ratings, because they have risk they might not be repaid!

        The UAW ownership is because GM agreed to pay $15B (or so, I forget) to fund the health care obligations of salaried workers, so those obligations would be the UAW's obligations. This was finalized years before Pres. Obama took office, before he even entered the Senate I believe. Well, when the time came, GM didn't have the money, so they had to contribute equity instead of cash.
        • 5 Years Ago
        Dude, you start with two. You just haven't been downrated yet.

        The banks that have paid back their loans basically took the loan money and paid it back. They never opened the credit markets up like they were supposed to. They just paid them back to get the govt off their backs, all the while earning interest on the loan money while it sat unused. The TARP program established last September? October? was disastrously designed.
        • 5 Years Ago
        No, Sea Urine no one likes you. Being pro-life, I would have made an acception in your case.
        • 5 Years Ago
        Wow, i still have 2 stars?

        Finally, you like me, you really, really like me.
        • 5 Years Ago
        Caddy:

        And it's "exception" not Acception, which isn't even a word.
      • 5 Years Ago
      *sighs*
        • 5 Years Ago
        I never said GMAC sold cars. However, I do have a GMAC lease.
        • 5 Years Ago
        But... but... but... they're too big to fail.
      invisiblepigeon3
      • 5 Years Ago
      Reading this makes me turn red with anger at the stupidity of human beings. Entities like GMAC and GM should have been flushed down the toilet where they belong. Now they're getting BILLIONS more dollars as a reward for FAILURE.

      Brilliantly logical huh? GM, Chrysler and GMAC and all the rest of the bailed-out a-hole companies can gtfo of the USA and move to a country that rewards failure and sloth... How about moving your operation to Russia or China? They've got the communist looter mentality all worked out already.
      • 5 Years Ago
      Okay this is essentially a bank .. so this IS a bailout .. so those people who don't understand the difference between lending money and giving money can finally be correct on this when they say they are giving tax money to this bank entity with zero chance of getting anything back for it.

      As far as the GM loans .. the taxpayers will MAKE money off the transaction if it all goes according to plan; and apparently it is going better then planned last we heard.
      • 5 Years Ago
      Boo! Hiss!
      • 5 Years Ago
      Why is it that every company GM has ownder has suffered under and after its ownership? someone needs to look at its Detroit management.
      • 5 Years Ago
      Interesting that GMAC was taken over by the greedy investors who at one time ran Chrysler. By making themselves a bank they are no longer tied to GM or Chrysler and can qualify for tarp funding. Me smells political payoffs here a bunch.
      • 5 Years Ago
      Except for the "GM" in the name (itself misleading since Chrysler/Cerebrus owns a larger share) this isn't really anything to do with autos. GMAC lost this money on mortgage lending. Clearly the mortgage business isn't turned around yet.
        • 5 Years Ago
        Yet Ford Credit wasn't so foolish to be exposed to the mortgage market. GMAC (and GM) benifited from the boom--now we all pay for the bust.
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