Feds pump $6 billion into GMAC

The U.S. Treasury will buy a $5 billion stake in troubled lender GMAC LLC. The government will also loan the company $1 billion so it will be able to participate in a rights offering as part of GMAC’s reorganization as a bank holding company.

GMAC, which received approval to reorganize on Christmas Eve, also said it has raised enough capital through a debt-for-equity swap to meet Federal Reserve requirements.

While the infusion keeps GMAC afloat, it puts an end to Cerberus Capital Management’s hopes of swapping Chrysler’s automotive operations to General Motors in exchange for GM’s 49 percent of GMAC. Both Cerberus and GM will have to reduce their holdings in order to avoid having to meet federal financial requirements for controlling ownership of a bank. GM will reduce its stake in GMAC to no more than 10 percent while Cerberus will distribute its 51 percent share among its investors until it directly controls just 14 percent. This also very likely means the merger discussions between Chrysler and GM will be shelved as neither Chrysler’s dwindling cash reserve nor GMAC are in play.

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