GMAC in line for another $3.5 billion in bailout money

From Bloomberg:

GMAC Inc., the home and auto lender, is discussing with the Obama administration an additional aid package of about $3 billion to $4 billion, according to a person familiar with the matter.

The size of the assistance remains under negotiation, the person said on condition of anonymity because the talks are private. A deal may be reached within days as Detroit-based GMAC incorporates losses from its home-loan businesses, the person said. The objective is to restore the company to profit in the first three months of next year, the person said.

GMAC has already received two rounds of government aid totaling $13.5 billion as it struggled with losses at its home mortgage operations, which include Residential Capital LLC, known as ResCap. The Obama administration regards the lender as crucial to the survival of the U.S. auto industry. General Motors Co., its former parent, and Chrysler Group LLC rely on the firm to finance their vehicle buyers.

The Detroit News makes the $3.5 billion sound more definitive and says Treasury plans to announce the aid as early as tomorrow morning. The bailouts keep coming. Apparently, the Treasury Secretary is aware these bailouts are unpopular but he says:

The test is whether you have people willing to do the things that are deeply unpopular, deeply hard to understand, knowing that they’re necessary to do and better than the alternatives.

About 

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.