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Obama To Give $3 Billion More To GMAC

From the Wall Street Journal:

GMAC Set for Another Cash Infusion

By DAN FITZPATRICK And DEBORAH SOLOMON

GMAC Financial Services is close to getting approximately $3.5 billion in additional aid from the U.S. government, on top of $12.5 billion already received since December 2008, according to people familiar with the situation.

The announcement, expected within days, will coincide with GMAC taking additional steps to absorb losses related to its mortgage operations, these people said. The cleanup is designed to return the Detroit-based finance company to profitability in the first quarter of 2010, according to one of these people.

A GMAC spokeswoman declined to comment on any potential government action but said, "GMAC has been conducting a strategic review of its business and evaluating options to address the challenges in its mortgage operation." The spokeswoman said GMAC wants to prepare itself to repay the U.S. government.

The willingness by the U.S. Treasury to deepen taxpayer exposure to GMAC reflects the troubled company’s importance to the revival of the auto industry. The company was told to raise additional capital as part of government-led stress tests of large banks conducted earlier this year. The tests were to determine whether firms would need more capital to continue lending if the economy deteriorated in 2009 and 2010.

GMAC has only filled a portion of its capital hole and, unlike other banks that participated in the stress tests, has been unable to attract much capital from private investors. The Treasury said earlier this year that it would make as much money available to GMAC as needed to fill its capital hole and projected the firm would need another government infusion of as much as $5.6 billion.

GMAC’s capital needs have turned out to be somewhat less than originally envisioned, in part because impact from the bankruptcies of General Motors Corp. and Chrysler Corp. was not as severe as federal regulators originally projected.

A Treasury spokesman said Tuesday: "As we stated on Nov. 9, Treasury is in discussions with GMAC to ensure its capital needs as determined last May by the stress tests are met."

GMAC has argued it didn’t need additional support

So GMAC failed the government’s highly artificial and arbitrary ‘stress test’ and is now going to be punished with $3 billion taxpayer dollars. That’s a great system.

Of course this is a two-fer for Mr. Obama. He gets to siphon more of our money into the pockets of two of his constituents: the ACORN brigade and the UAW.

And surely the SEIU and Teamsters are going to get a slice as well.

Think of it as a belated Christmas gift.

Or more likely, a present just in time for Kwanza.

This article was posted by Steve on Wednesday, December 30th, 2009. Comments are currently closed.

7 Responses to “Obama To Give $3 Billion More To GMAC”

  1. U NO HOO says:

    GMAC

    Give Me Another Chance

    Give Me Alotta Cash

  2. Yarddog1 says:

    Institutionalized plunder to favor one class over another or simply nationalization of industry?

    Whatever it is – it ain’t good.

  3. BillK says:

    The heck with $3 billion; from the article above:

    The Treasury said earlier this year that it would make as much money available to GMAC as needed to fill its capital hole and projected the firm would need another government infusion of as much as $5.6 billion.

    With all the deficit spending he’s doing it’s easy to see where a billion here or there is no big deal…

  4. proreason says:

    Nice Christmas bonus for the hard-working UAW. About $30K apiece….less the skim.

  5. Liberals Demise says:

    Anyone else hear a sucking sound?

    “I’m not out to run the automobile business.”
    president obama

  6. U NO HOO says:

    How can GMAC lose money?

    It lends money.

    Too much pay to executives who are stupid?

    I’ve got a dollar to lend, and I don’t lend it unless costs are covered and I feel reasonably sure I’ll get it back, or have collateral like a Chevy…oh yeah, never mind.

  7. Tater Salad says:

    GM is owner of GMAC of less than 50%………Cerberus is the big owner. The UAW doesn’t have any vested interest in GMAC and could care less.


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