Should taxpayers give GMAC another $2.8 - $5.6 Billion?

[Sub Atomic]

Treasury, GMAC in talks for 3rd round of US aid
Treasury says auto lender GMAC in talks for billions more in taxpayer funds to boost capital


NEW YORK (AP) -- GMAC, the former lending arm of General Motors Co., is in talks with the Treasury Department for a third injection of taxpayer aid, a further sign of the U.S. government's entrenchment in the U.S. auto industry.

The Treasury Department mandated earlier this year that GMAC Financial Services raise an additional $11.5 billion in capital after undergoing a "stress test" along with 18 other banks. While other banks deemed undercapitalized have been able to raise funds from private investors, GMAC has been forced to go back to the government.

GMAC is a crucial player in the U.S. auto industry, providing wholesale financing to many General Motors and Chrysler dealerships to pay for the vehicles on their lots. The company also operates a mortgage lending unit -- Residential Capital -- which has been pummeled by the housing market downturn. It also runs an insurance unit and an online banking unit called Ally Bank.

A Treasury Department spokesman confirmed that it was in talks with GMAC about a third helping of aid. The government already owns a 35 percent stake in GMAC after providing $12.5 billion to the lender. It also owns a majority-stake in GM and a smaller stake in Chrysler.

The Treasury spokesman declined to comment on whether the government's ownership stakes in GM and Chrysler make it more willing to again help prop up GMAC. But Kirk Ludtke, a senior vice president of CRT Capital Group LLC in Stamford, Conn., who follows GMAC, said the automakers can't succeed without GMAC.

"We continue to believe that a viable GMAC is critical to the success of GM and Chrysler," Ludtke said.

Citing people familiar with the matter, The Wall Street Journal first reported late Tuesday that the U.S. government could hand over another $2.8 billion to $5.6 billion to Detroit-based GMAC. The latest capital infusion would be in the form of preferred stock, the paper said. The government's stake could rise if the new preferred shares were ever converted into common stock.

A GMAC spokeswoman declined to comment.

http://finance.yahoo.com/news/Treasury-GMAC-in-talks-for-apf-1495891587.html?x=0&sec=topStories&pos=2&asset=&ccode=

[FarCenter]

1. GMAC is where GM was hiding the losses from car manufacturing

If you lease cars, or provide loans on favorable interest rates (e.g. 0%) then you can sell the car without factory rebates. This keeps the General Motors sales revenues artificially high, and it makes the car business look better than it really is.

Screw GMAC -- not a penny more of taxpayer money.

[AllentownJake]

2. No more bailouts

It is bad fiscally and politically.

[Obamanaut]

3. no n/t

[Laelth]

4. Yes. The United States must have an auto manufacturing industry.

It's a national security issue.

:dem:

-Laelth

[Sherman A1]

6. GMAC does not produce autos

it is a finance company. I would not give them one dime. There are others out there that can loan money for car purchases.

[Laelth]

7. I understand your position.

Lots of cars are bought through GMAC, however. If I were convinced that other lenders could fill this gap, and if I were convinced that doing so would not hurt GM and its workers, I might be more inclined to deny them a bail-out.

Either way, GMAC is better than AIG and Citicorp. Given the choice, I'd bail out GMAC first.

:dem:

-Laelth

[Sherman A1]

9. While I understand your point of view with them being linked to GM

I have to ask would cars not sell or be financed if GMAC was not around. I am sure that other lenders could pick up the market share. I am not wanting to hurt the Auto Workers, but at what point do we stop handing out taxpayer money?

[Hubert Flottz]

5. Do they need more money for their CEOs or to build some

factories overseas?

[taught_me_patience]

8. Not just no... HELL NO

We need to stop this bailout insanity.

[City Lights]

10. No fucking way.

:thumbsdown: