by Jeannine Aversa and Stephen Manning
Associated Press News
December 30, 2009
WASHINGTON (AP) – The government on Wednesday was moving ahead with a fresh multibillion dollar cash infusion to stabilize auto finance company GMAC Financial Services as it continues to struggle with big losses in its home mortgage unit, according to a person with knowledge of the matter.
The person, who spoke on condition of anonymity because discussions weren’t complete, says the government aid would range around $3 billion. That would be less than the roughly $6 billion the government had earlier thought GMAC would need to stabilize the company.
Shoring up GMAC has been a major component of the Obama administration’s massive effort to rescue ailing automakers General Motors and Chrysler. The lender provides critical wholesale financing to thousands of GM and Chrysler auto dealers, allowing them to stock their showroom floors with vehicles. GMAC has already received $12.5 billion in taxpayer money and is 35 percent owned by the federal government.
But GMAC also operates a large residential mortgage business, ResCap, which was battered by the recent housing collapse. GMAC was obligated by the Treasury Department to raise $11.5 billion in additional capital earlier this year after failing the government’s stress test for banks, largely because of ResCap’s big losses.
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