Updated from 12:20 a.m. EST
GMAC Financial Services
is expected to get about $3.5 billion more in additional aid from the U.S. government, the
Wall Street Journal
reports, citing people familiar with the situation.
GMAC, the automotive lender which is 35% owned by the U.S. government, already has received $12.5 billion since December 2008. The government's "stress tests" on financial institutions earlier this year demanded GMAC raise an $11.5 billion capital cushion; it was unable to raise the funds privately.
An announcement is expected within days and will coincide with GMAC taking additional steps to absorb losses related to its mortgage operations, the
GMAC's cleanup is designed to return the company to profitability in the first quarter of 2010, one person said.
A GMAC spokeswoman declined to comment for the
specifically on any government action, but said, "GMAC has been conducting a strategic review of its business and evaluating options to address the challenges in its mortgage operation." The spokeswoman said GMAC wants to repay the U.S. government.
Treasury spokesman Andrew Williams declined comment on the
report but reiterated that Treasury is in discussions with GMAC "to ensure its capital needs" as determined by the stress tests.
GMAC has been in talks with Treasury officials for months over additional taxpayer aid.
The government's existing stake in GMAC is likely to eventually increase, a move that could give the U.S. more control over the firm, including the right to appoint additional directors to GMAC's board, the
GMAC is getting the added financing just as companies such as
Bank of America
pay back funds received under the government's Troubled Asset Relief Program.
-- Written by Joseph Woelfel in New York.
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