Report: GMAC to get another $3.5B in federal aid

[December 30, 2009]  NEW YORK (AP) -- GMAC Financial Services is expected to receive $3.5 billion more in federal aid to further stabilize the automotive lender, The Wall Street Journal reported Tuesday.

The announcement is expected within days and would coincide with GMAC taking more steps to absorb losses related to its mortgage operations, the newspaper reported, citing people familiar with the situation.

GMAC, which is based in Detroit, has received $12.5 billion in taxpayer money and is 35 percent owned by the federal government. Results of the federal government's "stress tests" earlier this year demanded that GMAC raise an $11.5 billion capital cushion to help it weather further economic decline. GMAC was unable to raise the funds privately.

GMAC spokeswoman Gina Proia declined comment on the newspaper report but said the company "has been conducting a strategic review of its business and evaluating options to address the challenges in its mortgage operation."

Proia said GMAC was trying to position itself to improve its financial performance and repay the U.S. government.

Treasury spokesman Andrew Williams also declined comment on the report but reiterated that Treasury is in discussions with GMAC "to ensure its capital needs" as determined by the stress tests.

GMAC, instrumental to the operations of automakers General Motors Co. and Chrysler Group LLC, has been in negotiations with Treasury officials for months over additional taxpayer aid.

Michael Carpenter, who succeeded Alvaro De Molina as the company's chief executive officer in November, has said the company would need no more than $5.6 billion in aid. Lawmakers estimated the company would receive between $2 billion and $5 billion in additional aid.

[Associated Press]

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