The US Treasury last night announced a $3.8 billion fresh capital injection into GMAC, the former finance arm of General Motors that became a bank to secure access to federal rescue aid. The capital infusion will give the US government a controlling stake in the company.
'Due to a variety of factors, including that the restructurings of General Motors and Chrysler were accomplished with less disruption to GMAC than banking supervisors initially projected, Treasury will commit $3.8 billion of new capital to GMAC rather than the $5.6 billion originally announced,' the Treasury said in a statement. It had previously injected $12.5 billion into GMAC.
The Treasury also said it was restructuring its investment in GMAC to protect taxpayers and put GMAC in a position to raise private capital and pay back taxpayers as soon as possible.
That move will raise Treasury's equity stake in GMAC to 56% from 35%. Given the increased ownership, the Treasury will have the right to appoint two additional directors, in addition to the two it has, to the nine-member GMAC board of directors. GMAC said it planned to step up the pace of its repayments to the US government.
GMAC was the long-time financial arm of the largest US car maker until 2006, when GM sold a majority stake. In December 2008, GMAC won permission to become a bank holding company to have improved access to Fed lending amid the global financial crisis.
