Reply #72: Car Talk: GMAC could get $7.5 bln from U.S. next week [View All]

http://news.yahoo.com/s/nm/20090509/bs_nm/us_banks_gmac_1

WASHINGTON (Reuters) – GMAC, the troubled automobile lender, may receive a $7.5 billion infusion from the U.S. government as early as next week, the Washington Post reported in its Saturday edition, citing unnamed sources.

The funds for GMAC would come as part of an Obama administration package that aims to revive the nation's financial system even after it found that major banks need less financial aid than expected, the Post said.

U.S. Treasury Secretary Timothy Geithner told Reuters Television on Friday that the administration will provide substantial support to GMAC, a vital provider of financing for buyers of U.S.-made cars.

"It's likely, again, that GMAC will need to take additional capital from the government and we'll be prepared to provide that," Geithner said in the interview.

The Treasury and U.S. banking regulators say GMAC needs to raise $11.5 billion to fill a capital hole it could face if the economy were to deteriorate further.

GMAC, the former financing arm of General Motors Corp., has taken $5 billion from the government already. In addition, the Treasury has lent GM $884 million to support GMAC's lending activities.

Under the restructuring of Chrysler Corp., GMAC is assuming the business of Chrysler Financial. When the Obama administration announced Chrysler's bankruptcy filing on April 30, it said it would offer support to GMAC, including necessary capital, to allow it to finance Chrysler's sales.