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GMAC Bailout Blasted by Oversight Panel

The federal government has spent $17.2 billion to bail out GMAC but the rescue came at great public expense to taxpayers, says a government watchdog report.

WASHINGTON (

TheStreet

) -- The federal government has spent $17.2 billion to bail out

GMAC

but the rescue came at great public expense to taxpayers, says a government watchdog report.

Both GMAC, the giant auto finance company, and Treasury insist the company is solvent and won't require any additional bailout funds. The government now owns 56.3% of the company. But it's estimated that $6.3 billion or more may never be repaid to taxpayers, says a report released Thursday by the Congressional Oversight Panel.

The report says there is no doubt that Treasury's actions "to preserve GMAC played a major role in supporting the domestic automotive industry."

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But the panel says it is deeply concerned Treasury hasn't required GMAC to lay out a clear path to viability or a strategy for fully repaying taxpayers.

"Despite a $17.2 billion TARP investment, there is still no clear business plan for GMAC," the report says. "Treasury has not given due consideration, for example, to the possibility of breaking apart GMAC and merging the auto finance part back into (General Motors), a step which would restore GM's financing operations to the model generally shared by other automotive manufacturers."

"Moving forward, Treasury should clearly articulate its exit strategy from GMAC.More than a year has elapsed since the government first bailed out GMAC, and it is long past time for taxpayers to have a clear view of the road ahead," the 170-page report added.

-- Reported by Joseph Woelfel in New York.

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