GMAC gets $7.5b for car loans
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SAN FRANCISCO - GMAC LLC, the auto and home lender bailed out in December, received $7.5 billion from the US Treasury to expand auto lending at Chrysler LLC and was cleared to sell government-backed debt for the first time.
The investment includes $4 billion for GMAC to originate loans to Chrysler buyers and sellers, the Treasury said yesterday in a statement. The remaining $3.5 billion will help Detroit-based GMAC meet capital needs that resulted from the government stress tests. The Treasury said it expects to hold a 35.4 percent common equity interest in the company.
The second capital infusion brings the government's investment in GMAC to $13.5 billion. It signals the Obama administration's commitment to secure financing for customers and dealers of General Motors Corp. and Chrysler, two of the country's three biggest automakers. Chrysler filed for bankruptcy on April 30, and GM is likely to follow on June 1, as the US auto industry suffers from 18 straight months of declining sales.
The contract with the government, announced three weeks ago, includes a four-year agreement for GMAC to be the preferred provider of incentivized retail financing for Chrysler, and originate loans to customers that had relied on Chrysler Financial.
