GMAC May Receive Another $7.5 Billion from U.S. Government

Reuters reports that GMAC may be in line for another $7.5-billion infusion, whichcould come as early as next week. The troubled lender needs to raise $11.5 billion in capital incase the economy continues to spiral downward.

<!–[if gte mso 9]>;<xml>; <w:WordDocument>; <w:View>;Normal</w:View>; <w:Zoom>;0</w:Zoom>; <w:PunctuationKerning/>; <w:ValidateAgainstSchemas/>; <w:SaveIfXMLInvalid>;false</w:SaveIfXMLInvalid>; <w:IgnoreMixedContent>;false</w:IgnoreMixedContent>; <w:AlwaysShowPlaceholderText>;false</w:AlwaysShowPlaceholderText>; <w:Compatibility>; <w:BreakWrappedTables/>; <w:SnapToGridInCell/>; <w:WrapTextWithPunct/>; <w:UseAsianBreakRules/>; <w:DontGrowAutofit/>; </w:Compatibility>; <w:BrowserLevel>;MicrosoftInternetExplorer4</w:BrowserLevel>; </w:WordDocument>; </xml>;<![endif]–>;<!–[if gte mso 9]>;<xml>; <w:LatentStyles DefLockedState=”false” LatentStyleCount=”156″>; </w:LatentStyles>; </xml>;<![endif]–>;<style>; <!– /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-parent:””; margin:0in; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:”Times New Roman”; mso-fareast-font-family:”Times New Roman”;} a:link, span.MsoHyperlink {color:blue; text-decoration:underline; text-underline:single;} a:visited, span.MsoHyperlinkFollowed {color:#606420; text-decoration:underline; text-underline:single;} @page Section1 {size:8.5in 11.0in; margin:1.0in 1.25in 1.0in 1.25in; mso-header-margin:.5in; mso-footer-margin:.5in; mso-paper-source:0;} div.Section1 {page:Section1;} –>; </style>;<span style=”font-size: 12pt; font-family: “Times New Roman”;”>;GMAC would receive the funds as part of the Obama administration’s package intended to revive the nation’s financial system. On Friday, U.S. Treasury Secretary Timothy Geithner told Reuters that the administration is prepared to provide substantial support to GMAC, a crucial provider of financing for dealers and buyers of American cars.

The former financing arm of GM already has received $5 billion from the government. Plus, the treasury has lent GM $884 million to support GMAC’s lending activities.

Part of Chrysler’s restructuring included GMAC assuming the business of Chrysler Financial. When Chrysler’s bankruptcy was announced, the Obama administration said it would offer enough support to enable GMAC to finance Chrysler’s sales.

Source: Reuters