There has been a great deal of debate about whether a car company lending arm should qualify for federal bailout funds. GMAC is no longer owned exclusively by GM (GM) because hedge fund Cerberus has the majority share.
GMAC does have a large mortgage portfolio, but the company is still on the edge of being an institution which the government should cover in its nearly universal financial firm salvation program. Now that GMAC has been designated a "bank", it may end up with bailout money from more than once source.
According to Reuters, CreditSights points out that aside from $6.3 billion in TARP money the firm might have applied for, "GMAC may also be eligible to sell up to $17.5 billion in bonds backed by the Federal Deposit Insurance Corp if approved to sell debt under the government’s Temporary Liquidity Guarantee Program (TLGP)."
It remains to be seen whether GMAC will attempt to sell this type of bond. The company does need the capital. Like troubled firms with access to federal programs GMAC will grab as much as it can.
It will also be interesting to see what other "non bank" financial institutions will attempt to qualify as "banks" to get into the bailout programs and how much the government will be willing to increase the size of the pot as the number of credit markets emergencies goes up.
Douglas A. McIntyre
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