In a move announced today, the administration has said that they will provide an additional $3.8 billion in government aid to GMAC Financial Services, raising its stake in the company from 35% to 56%. GMAC has thus far been the recipient of $12.5 billion in government aid sonic December ’08. The funds are said to help the company as they are faced with a balance sheet comprised of one third home loans.
A bondholder of the company’s who wishes to remain anonymous, has mentioned that GMAC would be wise to sell off their mortgage servicing business, which processes borrowers payments and has a value of about $3 billion. The company’s mortgage business lost about $600 million in the third quarter, while the auto finance operation made about $164 million after taxes.
Like GM, GMAC has undergone a top management change, as CEO Al de Molina resigned and was replaced by former Citigroup executive Michael Carpenter. The company has been unable to raise private capital after a government analysis determined that approximately $11.5 billion in funds were needed for the company to remain efficient.
– By: Stephen Calogera