The U.S. government is preparing to come to the rescue of GMAC Financial Services — the onetime finance arm of General Motors – once again.
According to several media reports, the troubled lender is expected to receive within days approx. $3.5 billion in additional aid from the U.S. government, on top of $12.5 billion already received since December 2008.
The anticipated aid for Detroit-based GMAC, which last month reported a quarterly loss of $767 million, would come from the TARP pot — a $700 billion taxpayer-financed bailout fund the government set up at the height of the financial crisis last year.
Treasury spokesman Andrew Williams said on Wednesday that the “Treasury is in discussions with GMAC to ensure its capital needs as determined last May by the Stress Tests are met.”
Federal regulators concluded back in May that the firm had to raise $11.5 billion in capital, the equivalent at the time of roughly half its equity.
GMAC spokeswoman Gina Proia on Tuesday night declined comment on media reports but said the firm “has been conducting a strategic review of its business and evaluating options to address the challenges in its mortgage operation.”
This is only the latest instance of extraordinary federal aid for GMAC, whose survival is seen as crucial to GM and Chrysler Group.
GMAC has argued it didn’t need additional support. However, Michael Carpenter, who succeeded Alvaro De Molina as the company’s CEO in November, has said the company would need no more than $5.6 billion in aid.
GMAC is 35% owned by the federal government.
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And the bailout orgy continues.