GMAC got another big handout from the feds last night. The car finance company, now a bank, received $5.9 billion in December of last year. Along with yesterday’s $7.5 billion from Treasury, the lender will now be permitted to issue debt insured by the FDIC (Federal Deposit Insurance Corporation) to the tune of $7.4 billion. That money will help it finance daily operations, according to the New York Times.
If you want more details, here they are. The good part: Both buyers and dealers need to finance car purchases, and GMAC will now provide a good chunk of that money for Chrysler and GM vehicles. The government badly needed to prime this pump. The bad part: GMAC failed the recent stress tests appallingly, coming up $11.5 billion short of what it needed to withstand a still-worse economy. And it desperately needs new capital. The ugly part: The feds have made a very big commitment to support the auto industry, and they probably aren’t done yet.
What do you think? Is enough enough, or will the government need to do more to get the industry on its feet?