GMAC Expected to Receive Another $3.5 Billion in Federal Aid
%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%%While GMAC decides the fate of its home lending operation, it is still the largest provider of financing for customers buying GM and Chrysler cars. GMAC also finances car dealers who use its loans to buy vehicles from the car companies.
A Treasury infusion of $3.5 billion into GMAC should be seen primarily as a way to protect the almost $70 billion the government has put into GM and Chrysler. The two companies are still struggling with weak sales and weak balance sheets. They are also locked in a fierce competition with Ford (F) and Asian automakers for market share in the US. A reduction in financing options for GM and Chrysler customers would severely damage their ability to sell vehicles.
Nonetheless, many experts believe that GM and Chrysler will never recover enough to repay the taxpayers. If that's the case, providing more money to GMAC to support the two firms is no more than throwing good money after bad.