GMAC Seeks Third Round of Bailout Aid

DETROIT (TheStreet) -- GMAC Financial Services is in talks with the Treasury Department for its third infusion of government funding, reports say.

The U.S. government is likely to inject $2.8 billion to $5.6 billion of capital into the auto lender, on top of the $12.5 billion that GMAC has received since December 2008, the Wall Street Journal reports, citing people familiar with the matter. The latest round of funding would be in preferred stock. The U.S. stake of 35.4% in GMAC could increase if existing shares eventually are converted into common equity.

The new capital would help firm up GMAC's balance sheet and solidify its auto-loan business, the Journal reports.

Federal officials also are moving to shore up GMAC's ability to fund its daily operations, with the Federal Deposit Insurance Corp. telling the company Tuesday the agency will guarantee an additional $2.9 billion in debt, the Journal reports, citing people familiar with the discussions. The FDIC backed $4.5 billion in GMAC-issued debt earlier this year.

GMAC faces a November deadline to raise the $11.5 billion capital cushion mandated by results of the government's "stress test" earlier this year.

A Treasury Department spokesman confirmed Tuesday that GMAC is in discussions about securing additional government help, the Associated Press reports.

If GMAC was to receive the funding it would be the only U.S. company to receive three rounds of bailout aid.

Among U.S. banks that got a total of $204.64 billion in aid through the Troubled Asset Relief Program, just one-third of the capital has been repaid so far, the Journal notes. Government officials are skeptical that some banks now wanting to escape the government's grip are strong enough to do so, with Bank of America's(BAC) attempt to repay bailout funds snagged by a disagreement over how much additional capital the bank must raise to satisfy regulators, people familiar with the situation said.

-- Reported by Joseph Woelfel in New York .

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