On December 29th the U.S. Department of the Treasury purchased $5 billion of GMAC’s preferred membership interests and warrants. The treasury also said it will lend up to $1 billion to General Motors so that the company can purchase additional equity that GMAC is planning to offer as part of its effort to raise more capital.
The government aid is expected to provide a needed boost to American auto sales by freeing up more credit for consumers. The assistance is part of a larger government effort to aid the auto industry and is on top of the $17.4 billion in loans the Bush administration agreed to provide to the industry on Dec. 19th.
“We will continue to employ responsible credit standards, but will [also] be able to relax the constraints we put in place a few months ago due to the credit crisis,” said GMAC President Bill Muir in a statement. “We will immediately put our renewed access to capital to use in order to facilitate the purchase of cars and trucks in the U.S.”
GMAC Financial Services is a global finance company operating in and servicing North America, South America, Europe and Asia-Pacific. GMAC specializes in automotive finance, real estate finance, insurance, commercial finance and online banking. As of Dec. 2007, the organization had $248 billion in assets and serviced 15 million customers.