US treasury taking a majority stake in GMAC
By Andrew C., 26 Aug, 2010. 0 Comments
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The US treasury announced yesterday that it will channel a total of $7.5 billion into the car finance company GMAC thereby effectively taking a majority stake in the firm. This is in addition to the $5 billion the US Treasury already injected into GMAC, the former financial arm of GM in December last year to permit it to continue lending to GM and Chrysler dealers and retail buyers.
The Treasury also said that $4 billion of its investment is set aside for Chrysler finance, specifically. The US Federal Reserve has agreed to continue allowing GMAC to keep on lending to GM, even if it has a stake in the GMAC bank, to demonstrate how essential widely available credit is to the US car industry. Last December GMAC became a bank holding company so that it can receive its first emergency aid from the US government. The US Treasury said that the agreement would provide strong credit opportunities to help strengthen the auto financing market and to aid in the total economic upturn.
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