$3.8 Billion More for GMAC

One year and one day after the Bush administration first offered to rescue GMAC, the Obama White House  has announced a $3.8 billion bailout for the struggling auto- and mortgage-loan giant. From the Treasury Department’s statement:

Due to a variety of factors, including that the restructurings of General Motors and Chrysler were accomplished with less disruption to GMAC than banking supervisors initially projected, Treasury will commit $3.8 billion of new capital to GMAC rather than the $5.6 billion originally announced, resulting in a $1.8 billion reduction in Treasury’s previously forecasted TARP expenditures.

Prior to today’s actions, Treasury had invested $12.5 billion in preferred stock of GMAC. Treasury owns $13.1 billion in preferred stock in GMAC, through purchases and the exercise of warrants, and 35 percent of the common equity in GMAC.

The new infusion raises the government’s stake in GMAC to 56 percent. All of the cash, because it originates from the unfunded Troubled Asset Relief Program, will be borrowed, mostly from abroad.

UPDATE: Although GMAC is best known for its auto loans, the new cash will go toward the company’s mortgage-financing arm, The Associated Press reports:

All of the money injected by the Treasury will essentially go to shoring up GMAC’s ResCap unit, the arm best known for ditech.com and other housing-boom related mortgage offers that crashed as housing prices withered over the past couple of years. GMAC said the move, along with a $3.3 billion write-down in mortgages at ResCap and Ally Bank, should allow it to explore a sale or other action for ResCap.