GMAC Seeking Federal Bailout

Even though its parent company, General Motors, was turned down for federal bailout money, that hasn’t stopped the financial arm of the company, GMAC, to seek some much needed help from Uncle Sam. 

Not that the bailout money would completely stop the bleeding that has been strangling GMAC who lost $2.5 billion in the third quarter, and $7.9 billion in the past five quarters of its year and a half losing streak, but it would give a much need cash influx to try and survive the current market plunge.

Although GMAC promises the bailout money would be used strictly for the fortification of GMAC, and that GM will not be party to the funds, it is understood that indirectly GM will inevitably benefit from the funds because for one thing, they still own 49 percent of the financial firm after a majority sell-out to a private firm two years ago. 

For another thing, it would be a shot in the arm for would be car buyers and dealers who have had their hands tied by strict lending guidelines that allowed only buyers with excellent credit scores of 700 or better to qualify for financing.  GMAC’s bounty would subsequently help GM by making more funds available for loans.

Still bail out money or not, it might not be enough to salvage GMAC who is struggling on multiple financial fronts due to investments not only in the automotive industry but a huge chunk of mortgage financing.  Their mortgage lending and insurance accounted for more than half of its income over the past few years. GMAC’s investments in this area have gone belly up as well with the bursting of the housing market bubble.