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.