Daunting Numbers for GMAC

As we know, GMAC LLC is among the 19 largest banks in the nation that needs to raise new capital to meet the demands outlined after the Federal Reserve concluded its stress tests of the banks.

But the murmuring now suggest that GMAC will be forced to tap the Capital Assistance Program to raise its funds, and that will make GMAC effectively a servant of the federal government -- if it hasn't become one already.

BreakingViews spells out the daunting numbers GMAC faces. GMAC got $5 billion of TARP funds and has another $1.2 billion of non-equity Tier 1 capital "that it could try to swap into common stock." Even if both of those pools of capital are converted into common, GMAC would be $5.3 billion short of the government's mandate.

By BreakingViews's estimate, GMAC is worth perhaps $6.8 billion today, but most likely would be valued at $4 billion. That means GMAC will have a tough time finding investors to give it $5.3 billion, leaving it only one option: federal assistance. Put another way, GMAC will get Fannie Mae-ed.

Tags: bailout, gmac

Comment by Frank Rauscher on May 14, 2009 at 11:18am: Does GM still own 51% of GMAC?

Comment by JJ Hornblass on May 14, 2009 at 2:09pm: The folks at GMAC indicate that GM currently holds more than 59% of outstanding common membership interests in GMAC following the completion of a rights offering last January. The Cerberus-led consortium holds the remaining equity, amounting to around 40%. Both Cerberus and GM entered into agreements with the Fed to place theses interests into a trust for sale in connection with GMAC's bank holding company agreement.

Comment by Frank Rauscher on June 22, 2009 at 10:53am: Isn't ALLY BANK, which is spending heavily on TV in a postioning statement, actually a bank charter subsidiaary of GMAC?

Interesting that in their attempt to position itself as a TRUSTWORTHY bank, that they minimize the real truth. It took awile to get the phone rep to acknowledge their real ownership.

I also called and asked for a CRA statement, no one knows where one is. They do not make direct loans to customers. They only buy securitized loans - mostly mortgages according to the phone reps and a quick look at their call reports.

So how are they helping with car finance compared to mortgages finance?