GMAC Financial Services – the lending arm of both General Motors and Chrysler – will require another round of taxpayer-funded loans, the Federal Reserve said on Monday. GMAC has already received $12.5 billion in federal aid.
Last May the Federal Reserve ordered 10 of the nation’s largest banks to raise more capital in order to survive the deepening recession, with GMAC the only of the 10 banks to fail to meet that goal. GMAC was to raise $13.1 billion in new capital, per the Federal Reserve’s requirement.
“The one exception, GMAC, is expected to meet its remaining buffer need by accessing the TARP Automotive Industry Financing Program and is in discussions with the U.S. Treasury on the structure of its investment,” the Fed said in a statement.
It remains to be seen how much cash GMAC will need to borrow, but the lending firm has raised some cash on its own through the sale of U.S.-back debt, according to Reuters. However, GMAC’s main cash flow still hampered by a 10 percent unemployment rate, so something in the $10 billion range isn’t out of the question.
