GMAC in line for another $3.5 billion in bailout money
GMAC Inc., the home and auto lender, is discussing with the Obama administration an additional aid package of about $3 billion to $4 billion, according to a person familiar with the matter.
The size of the assistance remains under negotiation, the person said on condition of anonymity because the talks are private. A deal may be reached within days as Detroit-based GMAC incorporates losses from its home-loan businesses, the person said. The objective is to restore the company to profit in the first three months of next year, the person said.
GMAC has already received two rounds of government aid totaling $13.5 billion as it struggled with losses at its home mortgage operations, which include Residential Capital LLC, known as ResCap. The Obama administration regards the lender as crucial to the survival of the U.S. auto industry. General Motors Co., its former parent, and Chrysler Group LLC rely on the firm to finance their vehicle buyers.
The Detroit News makes the $3.5 billion sound more definitive and says Treasury plans to announce the aid as early as tomorrow morning. The bailouts keep coming. Apparently, the Treasury Secretary is aware these bailouts are unpopular but he says:
The test is whether you have people willing to do the things that are deeply unpopular, deeply hard to understand, knowing that they’re necessary to do and better than the alternatives.
More bailouts!? This is making me ill. Seriously, we have to make sacrifices. Stop shopping at Walmart, stop watching cable and get our news from the internet, cut up credit cards, take every nearly-worthless dollar out of BoA, Chase, Citibank and support the non profit credit unions. Dr. Martin Luther King would be so sad to see what’s happening with our country. It’s like we are in a state of emergency! END THE FED!
I agree that bailouts are not the answer. Look at CIT as an example. Here’s a company that received billions in TARP money but still failed. The bailout was a waste of taxpayer money.
However, it was able to use Chapter 11 bankruptcy to prevent liquidation and it is therefore, now operating in normal business conditions again, having exited bankruptcy.
We have bankruptcy laws for a reason and the government needs to let this process work. Failure is part and parcel of capitalism.