This e-mail came to my inbox from the FDIC last night:
The Federal Deposit Insurance Corporation (FDIC) announced today the approval of GMAC Financial Services to participate in the Temporary Liquidity Guarantee Program (TLGP) allowing the company to issue up to $7.4 billion in new FDIC-guaranteed debt. GMAC will pay a fee to the FDIC for this guarantee.
In connection with receiving FDIC approval, GMAC has committed to develop a funding plan. The plan will reflect GMAC’s management of the bank’s funding and deposit costs with a focus on diversifying funding sources and reducing the bank’s overall cost of deposit funding. GMAC and the bank have also committed to maintain bank capital at a level well above the regulatory minimums. These commitments, combined with the current level of TLGP-generated fees and the newly enacted holding company assessment authority, will fully protect the deposit insurance fund.
The participation of GMAC Financial Services in the TLGP is consistent with the parameters in place of the broader TLGP program. The program will expire on October 31, 2009.
Basically, GMAC has got $7.4 billion of new capital. CNN is calling this a bailout. However, given the need to continue financing auto loans at both GM and now Chrysler, this move was widely expected.