Following a $675 million first quarter loss, the U.S. government has ordered GMAC – the lending arm of General Motors and Chrysler – to raise an additional $13.1 billion in capital. GMAC’s first quarter results marked the company’s 10th consecutive quarterly loss.
Due to heavy losses in its mortgage and auto lending businesses, the federal government has ordered GMAC to secure $13.1 billion in new capital. That money is to be used to ensure the stability of the company moving forward.
Roughly $4 billion of that total will be used to secure the financing operations obtained from Chrysler Financial, including financing dealer and retail loans. The other $9.1 billion would go towards strengthening GMAC’s operations, per the government’s recent ‘stress test’.
According to the Washington Post, GMAC’s required $13.1 billion is the largest amount ordered by the federal government. However, that figure won’t be easy to obtain as most credit markets remain extremely tight. The U.S. government has already loaned GMAC $5 billion and it remains highly possible the U.S. government could get stuck with the bill for most or even all of GMAC’s newly required $13.1 billion.
