Treasury: GMAC bankruptcy was seen as costly, risky

WASHINGTON Feb 25 (Reuters) - The U.S. Treasury decided not to put auto financier GMAC into bankruptcy reorganization last year because it would have required $40 billion to $50 billion in financing from taxpayers and threatened the larger bankruptcies of General Motors and Chrysler, a senior Treasury official said on Thursday.

Ronald Bloom, special advisor to Treasury Secretary Timothy Geithner, told the Congressional Oversight Panel that the debtor financing was one of several considerations in the government's bailout strategy for GMAC.

"We had to take into account the cumulative execution risk that (we had) had we put all three of these companies into bankruptcy all at the same time," he said, referring to GM, Chrysler and GMAC.

Bankruptcy would have cut off all of GMAC's lines of credit and ability to securitize debt, requiring taxpayers to fill the gap so GM and Chrysler could finance dealers and sell cars and trucks, Bloom said. (Reporting by David Lawder, Editing by Chizu Nomiyama)