GMAC to receive government funding

Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} The bail-out season continues in the United States with GMAC, the financing arm of General Motors, being the latest company to join the list of those receiving government funds.   The US Treasury has committed $6 billion to support GMAC, as part of the governmentÔÇÖs effort to keep the largest US automaker out of bankruptcy. The funds will come from the $700 billion Troubled Asset Relief Program approved by Congress in October.   The funding was originally intended to buy troubled assets from banks but its remit has been extended to lenders, insurers, automakers and now auto- finance companies.   GMAC has traditionally provided the bulk of financing for car buyers at GM dealerships, and also the loans that dealers rely on for their inventories of GM cars and trucks. The credit crisis has severely limited its ability to provide these loans.   GMAC (owned 49 percent by GM and 51 percent by Cerberus, the owner of Chrysler) recently gained approval to become a bank holding company, giving it access to the emergency government funds offered to other financial institutions.   According to a statement issued yesterday, the Treasury will purchase $5 billion of GMAC shares and also lend $1 billion to GM so the automaker can reorganize the finance company as a bank holding company. The loan is in addition to $13.4 billion the Treasury agreed earlier this month to lend to GM and Chrysler.   GMAC said in a statement that it intended "to act quickly to resume automotive lending to a broader spectrum of customers."   ÔÇ£This is part of our strategy to position GMAC for long-term stability,ÔÇØ said Toni Simonetti, a spokeswoman for GMAC. ÔÇ£The reason weÔÇÖre doing this is so we can provide credit to consumers; weÔÇÖll put these funds to use right away.ÔÇØ   Cerberus bought its stake in GMAC from GM for $14 billion in 2006. After it becomes a bank holding company, GMÔÇÖs share will reduce to 10 percent and CerberusÔÇÖ to 30 percent.     *┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á┬á┬á *