GMAC seeks $5.6 billion more from government
Filed under: Bank of America, Citigroup, General Motors
Several sources are saying that GMAC, the former lending arm of GM, is negotiating with the Treasury to get as much as $5.6 billion more in bailout money. The financial firm has already received $13.5 billion from the federal government.
The main reason for helping GMAC is obvious; GM relies on the company to provide auto loans to dealerships and individual consumers. If its ability to lend were compromised, GM could be badly hurt. A lack of leasing options is already being blamed for much of Cadillac's 44 percent drop in sales during the first nine months of this year. While GMAC might survive without the government funds, its ability to make new loans would be crippled.
The money that will probably go to GMAC raises another critical issue: what happens if financial institutions that have already received government funds need more money to continue operating or lending money to consumers and businesses? It is currently assumed that the largest banks like Citigroup ( C) and Bank of America (BAC) are now on the mend and will be able to pay the government back the money that they have taken under TARP.
Dozens of medium-sized banks and financial firms took money from the government as part of the TARP program, and recent data from the Treasury shows that 34 of these did not pay dividends on the money for the August fiscal quarter. That means there are probably a number of severely troubled financial firms still battling to fix their balance sheet problems.
GMAC may not be the last financial operation to request more federal government funding, so what will the Treasury do if more companies come knocking on the door asking for additional capital? It could cause a bit of a panic if the government starts turning them down.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 7)
10-28-2009 @ 7:25AM
Denny said...
Never one did they mention why GMAC is losing that much money. Is it because of people do not have jobs, and there cars are on the repo list?
I say no more Money for GMAC. They need to tighten the belt and get there finances in order like the rest of us. They need to stop bad lending habits!!!!
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10-28-2009 @ 2:07PM
mickey said...
No, a billion times NO. The citizens told you not to give GM or GMAC any money at all and you did. Quit "pardoning" GMAC. It reminds me of Gerald Ford pardoning Richard Nixon.
10-28-2009 @ 7:37AM
bspennati said...
enough already no more money
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10-28-2009 @ 8:10AM
tom said...
Why don't they sell some of there assets,like the factories in Argentina,Russia and quit looking for a handout from the people here in this country.
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10-28-2009 @ 7:57AM
kdnorcutt said...
I agree in part with no more money. I also can see giving GMAC a boost in order to provide financing for car buyers. At least this bailout would go to help the credit market. All the money our government gave the banks did nothing to ease credit.
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10-28-2009 @ 8:15AM
mornewz said...
Detroit drunks ask Washington drunks to buy another round.
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10-28-2009 @ 11:17AM
Jack said...
Beautiful. It says it all.
10-28-2009 @ 8:18AM
Tom said...
More Obama Union Bail Out let GM fail all we are doing is supporting the blood sucking Unions because they support Obama. NEVER TRUST OBAMA HE HATES AMERICA!
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10-28-2009 @ 8:19AM
mickey mouse said...
I thought the UAW ,the Dems,and Obama were fixing this problem? And we want the last two to run a health care plan for us?
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10-28-2009 @ 2:12PM
pthomp said...
(1) UAW has nothing to do with gmac.
(2) Why would any sane American think that the dems,reps., or obama would or even could fix the problem ??
What it's gonna take is a few more rounds of retention/performance bonuses for the top executives at these institutions. This would trigger more bailout funds and give these executives enough time to move their wealth offshore and leave the country right before the chinese move in and bail AmeriChin out by giving us all free healthcare and jobs at chinamotors of Americhin.
You can blame the unoins, but that's not where the problem is !!!
10-28-2009 @ 8:34AM
James Pruitt said...
No more money.........
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10-31-2009 @ 7:46PM
Tim said...
Enough already. It was ludicrous that the government declared GMAC a bank last year, and thus eligible for welfare. Now, they want more money? NO!
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10-28-2009 @ 8:38AM
Edclark said...
And just the other day the CEO of GMC is getting a big bonus Obama is not going to cut his bonus ...........WHY?
Crooked bastards!
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10-28-2009 @ 10:06AM
Mark said...
Ed, you're confusing GM, GMC, and GMAC. I think you are referring to Fritz Henderson of GM, whose salary was announced last week.
10-28-2009 @ 8:37AM
terry francis said...
I do hope that the government does not give gmac any more money . They are still not trying to help home owners stay in their home.They are not even trying to restructure your mortgage loan so that you can keep your home. Their customer service never has any options for you and they sound very arrogant I have never made coments like this before,but it is time the government stop fulling the pockets of these executives and really help the home owners
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10-28-2009 @ 8:41AM
big g said...
GM's CEO Fritz Henderson is going to see his total annual compensation (stock and cash) upped to nearly $5.5 million. Henderson's actual salary will be cut 25% to $950,000 per year, according to unidentified sources. Henderson's current salary is $1.26 million. To comprise the rest of the $5.5 million, Henderson will receive $4.24 million in stock and restricted stock.
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10-28-2009 @ 9:26AM
Lance Manly said...
good info big! I just have a quick question to add to it; do you have any idea what kind of time limit the $4.2 million in stock must be held for before it can be sold? If there is a limit one of course, but I'd assume there has to be.
Thanks!!
10-28-2009 @ 8:39AM
Here we go again... said...
Great, lets bail out GMAC so that they can be the private lending arm of Government Motors which is doing terribly because the American people didn't want them to survive in the first place. How many GM cars were on the most reliable list?
Why can't GM dealers use regular banks like Toyota and Ford and Honda dealers so? Why must GMAC survive?
This is just another example of government theft of taxpayer money. Next election vote against all Republicans and Democrats! They are all thieves! If you don't have a 3rd party candidate available, then voice your displeasure by not voting at all. What is the point of voting in an election when you don't have any real choice anyway...
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10-28-2009 @ 8:48AM
Ben S said...
WTF!!!
10-28-2009 @ 11:27AM
AmericanWoman said...
I agree with "here we go again" ... the free enterprise system goes both ways ... Profit when you are responsible in your business practices and sell a great product .. and failure when you are irresponsible or the product quality is questionable .... THE GOVERNMENT can not change the FREE ENTERPRISE system to meet it's GREED! Stand up AMERICANS Tell President OBAMA NO! We don't want the type of change he's bringing to America. His change will KILL this country ... if He's allowed to make any more changes.