GMAC may receive second bailout

GMAC may receive second bailout

Treasury Department to inject $7.5 billion more into the ailing auto finance firm, report says.


DETROIT (Reuters) -- The Treasury Department is preparing to announce as early as Wednesday that it will invest an additional $7.5 billion in lender GMAC LLC in a deal that could allow the U.S. government to hold a majority stake in the Detroit-based auto finance company, the Detroit News reported.

GMAC, which also provides loans for consumers to buy General Motors Corp. (GM, Fortune 500) and Chrysler LLC vehicles, has been in talks for several weeks to secure additional capital, the newspaper said.

The Treasury Department declined to comment. A GMAC spokesman could not be immediately reached for comment.

Treasury Secretary Timothy Geithner told Reuters Television recently that the administration will provide substantial support to GMAC, a vital provider of financing for buyers of U.S.-made cars.

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Treasury and U.S. banking regulators have said GMAC needs to raise $11.5 billion to fill a capital hole it could face if the economy were to deteriorate further.

GMAC, the former financing arm of General Motors, has taken $5 billion from the government already. In addition, the Treasury has lent GM $884 million to support GMAC's lending activities.

The additional $7.5 billion could allow the Treasury Department to claim a majority stake in GMAC, if it chose to do so, a person familiar with the matter told the newspaper.

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