May 21, 2009 / 11:28 PM / 11 years ago

New multi-billion bailout coming for GMAC: report

WASHINGTON (Reuters) - The Obama administration on Thursday will announce another multi-billion-dollar bailout for embattled bank holding company GMAC, the Washington Post reported.

The announcement is expected to include $7.5 billion of new capital and action by regulators, including the Federal Reserve, to waive some rules to let GMAC lend to customers of both General Motors Corp (GM.N) and Chrysler LLC CBS.UL.

The Post said the Federal Deposit Insurance Corp. approved a program that will let GMAC raise money cheaply and take on lending for Chrysler car buyers as well as GM buyers.

The Fed had to waive a rule separating banking and commerce so that GMAC, the former financing arm of GM which recently became a bank holding company, would be able to lend to GM customers. The rule would have blocked it from doing so because GM is a major shareholder in GMAC.

GMAC is the primary source of loans for consumers to buy GM and Chrysler vehicles. It converted to a bank holding company last December so it could get access to $5 billion in the Treasury Department’s Troubled Asset Relief Program (TARP).

In addition, the Treasury has lent GM $884 million to support GMAC’s lending activities.

Earlier this month, the U.S. Treasury Department said GMAC needed to raise $11.5 billion to fill a capital hole it could face if the U.S. economy were to deteriorate further.

To read Washington Post story see here

Reporting by Glenn Somerville; Editing by Leslie Adler

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