By Stephen Markley on March 10, 2010
At least $6.3 billion of the $17.2 billion in taxpayer support to GMAC will likely never be repaid, according to the congressional panel overseeing federal bailout money. The panel criticized the Treasury Department for not attaching more conditions to the money as it did with Chrysler and GM.
Treasury wiped out the shareholders of those automakers and demanded detailed plans for how the companies would return to profitability; that was not the case for GMAC. Treasury also did not require an increase in consumer lending.
Chairwoman Elizabeth Warren of Harvard Law School said the Treasury Department should have taken GMAC into Chapter 11 bankruptcy to increase accountability and protect taxpayer investment.
GMAC and Treasury both insist the company is solvent and that GMAC will continue to lend money to auto dealers and consumers while paying back taxpayer dollars.
GMAC lost $8 billion in 2009 when its mortgage lending subsidiary ResCap imploded after pursuing a high degree of subprime mortgages and selling them in bundled securities.
Panel: Some Aid to GMAC Will Never Be Repaid (Detroit Free Press)