The US Treasury said last night that it had injected an additional $7.5 billion into cash-strapped US car finance giant GMAC to enable it continue providing loans to dealers and consumers.
The Treasury also said it could hold a 35.4% stake in GMAC, the former financial arm of struggling car maker General Motors. GMAC is now jointly owned by GM and leading car firm Chrysler's parent Cerberus Capital Management.
The new investment, on top of an earlier $5 billion injection, will support GMAC's ability to originate new loans to Chrysler dealers and consumers and help address GMAC's capital needs, the Treasury said in a statement.
Treasury Secretary Tim Geithner said the recapitalised GMAC would offer strong credit opportunities, help stabilise the car financing market and help in the recovery of the recession-hit economy.
GMAC won approval in December to become a bank holding company with greater access to state credit lines.
The Treasury's new investment will be in preferred shares but the statement pointed out that as part of an earlier transaction, it had retained the right to exchange a loan it made to GM for ordinary shares in GMAC.
Earlier this month, GMAC reported a first quarter 2009 net loss of $675m - wider than the $589m loss in the same quarter last year.
