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Federal Reserve to grant more bailout capital to GMAC

2009-11-10 04:28:22 (GMT) (Caymanmama.com - Banks & Banking News)

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Kansas City, Missouri (CaymanMama.com) — As the only one of the 19 stress-tested banks that the Federal Reserve identified to see if additional funds were needed, GMAC now stands to collect additional bailout money in order to withstand the future economic recession.

Thus far, the struggling finance company has been unsuccessful in raising the $11.5 billion it needed following the test result conclusion in May.

The Fed says GMAC is no expected to meet its requirements by getting a portion of the $700 billion financial bailout.

GMAC, who was previously the wholly owned financial services arm of General Motors, is now working on negotiations with the U.S. Treasury to finalize how much they receive.

GMAC reps did not comment on the matter.

According to the AP, “The test results in May found that 10 of the 19 largest banks needed an extra cushion of capital to withstand deeper losses they would see if the recession worsened. They were given six months to raise a total of $74.6 billion of capital.”

During the Fed’s announcement on Monday, it was confirmed they have raised a total of $77 billion.

One of the main reasons GMAC was unable to raise the money was partly because investors were charging unreasonably high interest rates so in order to offset the risk if GMAC should fall apart.



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