GMAC's total is now up to $13.5 billionEnlarge Photo
The new GMAC has the duty of financing not just GM's customers, but also Chrysler's now that the administration has required them to. So ensuring GMAC's success is a necessary element in the GM-Chrysler restructuring effort. "This new arrangement with GMAC will help provide a reliable source of financing to both auto dealers and customers seeking to buy cars," said Treasury Secretary Timothy Geithner in a statement.
But that doesn't make it any less costly to the taxpayer, or ensure that GM and Chrysler will ultimately survive in the long run.
The total tally of GMAC-received government funds is now up to $13.5 billion. The financing agency had already taken about $6 billion under the TARP program started last year.
Rather than being structured as a loan, the latest $7.5 billion will be paid in exchange for preferred equity, reports CNN Money, meaning the U.S. government will be a 35.4% owner of GMAC.