GMAC close to getting about $3.5 billion in added aid from the U.S. government

Article by Christian Andrei, on August 26, 2010

According to the Wall Street Journal report, GMAC Financial Services is close to getting about $3.5 billion in added bailout from the US government. As it’s known, the company has already gotten $12.5 billion December 2008. The announcement is expected within days and will coincide with GMAC taking additional steps to absorb losses related to its mortgage operations. 

According to a person familiar with the deal, this measure has been crafted to return the company to profitability in the first quarter of 2010.

The $3.5 billion is actually far less than what was first expected for this round of the financier's bailout. Last November, reports had come in saying the assistance was valued at up to $5.6 billion.

Financing for GMAC is crucial since it provides financing to General Motors and Chrysler dealerships. The Wall Street Journal further stated that the new capital is likely to allow GMAC to avert placing its ailing mortgage unit, Residential Capital LLC, or ResCap, into bankruptcy.

In an e-mail, GMAC spokeswoman Gina Proia said that as earlier stated, GMAC has been reviewing its business and evaluating options to address the challenges at ResCap and the mortgage operations.

Topics: gmac

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