US puts $7.5bn into GMAC to help finance deals for GM, Chrysler
22 May 2009

The US government is to take a majority stake in car finance firm GMAC, after the US Treasury announced yesterday that it was to inject $7.5 billion (£4.7 billion) into the company.

The move comes on top of the $5 billion (£3 billion) the Treasury poured into General Motors’s former financial arm last December and is intended to enable GMAC to continue lending to both GM and Chrysler dealers and retail customers. The US Treasury has also said that $4billion (£2.5 billion) of its investment is earmarked specifically for Chrysler finance.

To emphasise the importance to the US car market of widely available credit, the US Federal Reserve has even agreed to continue to allow GMAC to continue lending to GM, even though the US car giant has an interest in the GMAC bank.

Treasury secretary Timothy Geithner said the deal would, "offer strong credit opportunities, help stabilise our auto financing market, and contribute to the overall economic recovery."

GMAC became a bank holding company last December in order to get its first emergency bailout.

Matt Rigby

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4 April 2016
The government must have its own strong reason to inject an additional hefty sum of money to the finance company and it most likely is due to the potential it sees in this particular company in contributing towards overall economic recovery. It will be a win-win situation eventually for both parties, hence the initial step of an additional investment is indeed necessary to kick-off the relationship.

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