You might call GMAC the Zelig of the bailout: It pops up among the banks, the auto companies and the mortgage servicers. That's because it's really all three: a bank holding company that's the main financing arm for General Motors and Chrysler but also a big mortgage lender (that made billions in subprime loans). Given the nature of its businesses, it should be no surprise that GMAC has been among the banks most dependent on government aid. When regulators stress-tested the 19 biggest U.S.-based banks, GMAC emerged as the weakest and most in need of capital, relative to its size. The company was told to raise $11.5 billion.
But GMAC is far from out of the woods, and more federal aid may be on the way. On Tuesday, it announced a $3.9 billion loss for the second quarter. The company still needs to raise capital to satisfy regulators' demands, and it's unclear whether the company can do that privately. The CFO tells The Wall Street Journal that some of that aid could come from the Federal Reserve:
"The Fed has helped us a great deal already," Robert Hull, GMAC's chief financial officer, said in an interview. "If and when the time comes where we need more capital, we will explore a variety of avenues, including the Fed."
The U.S. has pumped a total of $12.5 billion tax dollars into GMAC. The company is also participating in the government's foreclosure prevention program, through which it will receive incentive payments from the government to modify mortgages. It's also taken advantage of a program run by the Federal Deposit Insurance Corporation to issue debt with the FDIC's guarantee: So far, it's issued $4.5 billion worth.
Other bailout links this morning:
Bank Regulators Resist Reform (WSJ)
New York Seeks Millions in Tax From Lehman (NYT)
Taylor Bean Suspended From Making FHA Loans (WSJ)