Get Ready: You Will Own GMAC, Too

Get Ready: You Will Own GMAC, Too

Congratulations, taxpayers. Soon GMAC LLC, the money-burning auto and mortgage lender, will likely join Fannie Mae, Freddie Mac, American International Group and Citigroup in your investment portfolio. By the time all the checks have cleared, you may have sunk upward of $20 billion into this former ward of General Motors, an amount equivalent to $210,000 for each of the nation's public schools.

So here are the basics: GMAC is set to receive two new injections of government capital. The first is expected to come by Friday, when the government will back up GMAC after it takes on the business once written by Chrysler's Chrysler Financial. This could cost the government about $4 billion, says a person familiar with the matter, though the final number isn't set.

The second step is to fill an $11.5 billion capital hole identified in the government "stress test" last week. GMAC's existing capital is around $22 billion, a figure battered by years of bad real-estate loans.

WSJ.com




[edit on 11-5-2009 by ddacunha]

When will this end? How many times are we going to be fooled to believe that multi-billion dollar corporations need to be saved? And if we are going to save these companies, can we at least clean house?

It's official: we own GMAC

The Treasury Department is poised to inject more than $7 billion into GMAC LLC, the first installment of a new government aid package that could reach $14 billion, according to people familiar with the matter.

wsj

Let's just hope they keep it as preferred stock. If they change it all to common stock we will never get our money back.