Feds invest another $7.5 billion into GMAC - DodgeIntrepid.Net Forums - Dodge Intrepid, Concorde, 300m and Eagle Vision chat
LinkBack Thread Tools Rating: Thread Rating: 2 votes, 5.00 average. Display Modes
post #1 of 2 (permalink) Old 05-22-2009, 04:40 PM Thread Starter

Join Date: Oct 2008
Posts: 336
Feedback: 0 / 0%
Post Feds invest another $7.5 billion into GMAC

The Treasury Department is preparing to announce as early as today that it will invest an additional $7.5 billion in GMAC LLC in a deal that could allow the U.S. government to hold a majority stake in the Detroit-based auto finance company.

GMAC, whose financial good health is key to providing loans for consumers to buy General Motors Corp. and Chrysler LLC vehicles, has been in talks for several weeks to secure additional capital. It had hoped to close the deal last week.

In December, the U.S. Treasury invested $5 billion in GMAC by buying preferred stock in the finance company. That stock carries a 9 percent dividend, but has no voting rights. Treasury also loaned GM nearly $900 million to buy GMAC stock.

If the Treasury exercised its options from those investments, which would give it voting rights, it could own about 35 percent of GMAC, a person familiar with the matter said Tuesday.

The person said the additional $7.5 billion could allow the Treasury Department to claim a majority stake in GMAC, if it chose to do so. The percentage of that potential ownership stake is unclear.

Treasury Secretary Timothy Geithner said this month that the government was preparing to provide “substantial support” to GMAC. The Treasury Department has said it will infuse more capital into GMAC to allow it to assume lending operations for Chrysler dealers and consumers from Chrysler Financial. GMAC was supposed to take over lending for Chrysler Financial on May 15, but that is on hold until it obtains government aid.

The Treasury and Federal Reserve Board this month announced GMAC needs $11.5 billion in additional capital reserves as the result of government stress tests. The additional assistance to be announced this week is likely not the end of government support for GMAC.

GMAC spokeswoman Gina Proia said Tuesday the company was still in talks with Treasury about the amount of the financial support — both for its capital requirements and to take over lending for Chrysler.

“Clearly, those are two areas where we are focusing on and we are having dialogue about support,” Proia said.

By Thursday, GMAC is set to complete reconstituting its board of directors. Its major shareholders — including GM — are also working to divest their holdings to no more than 9.9 percent of GMAC’s stock as part of the agreement that allowed GMAC to become a bank holding company, and thus eligible for federal bailout funds. GM no longer has any representation on GMAC’s board, even though it temporarily holds 60 percent of GMAC.

GMAC said earlier this month that it was working to shore up its capital.

“Ensuring the availability of credit to consumers and businesses is a key component in stabilizing the economy and a top priority at GMAC,” said GMAC chief executive officer Alvaro G. de Molina. “We support the government’s efforts to shore up the banking system and expect that the additional capital raised will further strengthen GMAC and aid in achieving our strategic objectives.”

GMAC seeks to obtain the additional capital by Nov. 9, and said it would file a plan with the Federal Reserve Bank of Chicago on how it will do so by June 8.

Auto Reporter is offline  
Sponsored Links
post #2 of 2 (permalink) Old 05-22-2009, 10:23 PM
Join Date: Feb 2008
Posts: 192
Feedback: 0 / 0%
Yeah but GMAC is no longer part of GM its now a regular bank so it falls under banking regulations GMAC has a huge hand in mortgages as well. Now throw in the Chrysler financing thing they are trying to free up money for lending.
Nheuer is offline  
Sponsored Links

Quick Reply

Register Now

In order to be able to post messages on the DodgeIntrepid.Net Forums - Dodge Intrepid, Concorde, 300m and Eagle Vision chat forums, you must first register.
Please enter your desired user name, your email address and other required details in the form below.

Member names may only be composed of alpha-numeric characters. (A-Z and 0-9)

!!ATTENTION ADVERTISERS!! If you intend on advertising anything on this forum, whatsoever, you are required to first contact us here . Additionaly, we do NOT allow BUSINESS NAMES unless you are an Authorized Vendor. If you own a business, and want to do sales on this site via posting or private message, you will need to follow the rules. Shops, Stores, Distributors, Group Buys without being authorized will see your account terminated.

User Name:
Please enter a password for your user account. Note that passwords are case-sensitive.


Confirm Password:
Email Address
Please enter a valid email address for yourself.

Email Address:


Thread Tools
Show Printable Version Show Printable Version
Email this Page Email this Page
Display Modes Rate This Thread
Linear Mode Linear Mode
Rate This Thread:

Posting Rules  
You may post new threads
You may post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On
Trackbacks are On
Pingbacks are On
Refbacks are On

For the best viewing experience please update your browser to Google Chrome