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Feds Add $6 Billion to Auto Bailout, Takes Stake in GMAC
By
Jen Chung
Published Dec 30, 2008
Modified Dec 30, 2008
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By
Jen Chung
Published Dec 30, 2008
Modified Dec 30, 2008
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The Treasury Department is increasing its aid to the automobile industry by throwing an extra $6 billion to the already-promised $17.4 billion. The additional funding is, per Politico, "chiefly to help the financial arm of General Motors Corp.": "Treasury will purchase $5 billion in senior preferred equity from GMAC LLC, and up to $1 billion more will be lent to GM itself so the automaker can participate in a rights offering at GMAC, which has wanted to reorganize itself as a bank holding company." The NY Times, which calls GMAC a "crucial source of automobile sales financing," adds that the company's transformation into a bank holding company allows it "borrow money at low rates" from the Fed. The hope is that GM's auto sales can be spurred, but one investment manager told Bloomberg News, "Philosophically, I'm not very happy about the fact that the government has to save an auto-finance company because management ran it into the ground."
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auto bailout
auto industry bailout
gm
GMAC
Jen Chung
Jen Chung is a former WNYC and Gothamist editor.
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Gothamist is funded by sponsors and member donations
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