Saturday, January 02, 2010
Demonstrating the financial industry isn’t entirely back on its feet again, GMAC, the finance branch of General Motors, came under the control of the federal government just before New Year’s, as Washington pumped another $3.8 billion into the stumbling lender. With its third installment of bailout funding, the U.S. government became the majority owner of GMAC, controlling 56% of the company. Previously, U.S. taxpayers only owned 35% of GMAC.
Altogether, the government has poured more than $16 billion into the lender that handles financing for customers and dealers of both General Motors and Chrysler. However, the problem area that forced GMAC to seek more federal help was not auto lending, but home loans. Its investment in subprime mortgages continues to haunt GMAC and drag down its ability to recover.
-Noel Brinkerhoff
GMAC Gets $3.8 Billion More in Aid (by Nick Bunkley, New York Times)
GMAC Gets $3.79 Billion More from Treasury (by Alistair Barr, MarketWatch)
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