GMAC to get $3.5 billion more from feds
TEXT OF INTERVIEW
Bill Radke: Meanwhile, GMAC may be getting billions more taxpayer dollars. Marketplace’s Alisa Roth joins us live from our New York bureau. Good morning.
Alisa Roth: Good morning.
Radke: How much is the government going to give GMAC?
Roth: Probably around $3.5 billion. The government’s already given GMAC
$12.5 billion. This $3.5 billion is actually quite a bit less than the government was saying GMAC would need as follow-up help. That original number had been more on the order of $6 billion.
Radke: Why does GMAC still need money, and why is the government giving it?
Roth: Well the most immediate problem is GMAC’s residential mortgage business. It’s been in a lot of trouble lately, and this new cash is supposed to help GMAC figure out what to do with that mortgage business. But I talked to a banking analyst this morning, Bert Ely, and he said there’s more to this than just houses.
Bert Ely: GMAC is playing a key role in the recovery of General Motors because GMAC finances not just car sales, but also many GM dealers.
Now GMAC also plays a similar role for Chrysler. And keeping both of those car companies in shape is clearly important to getting the auto industry back in shape.
Radke: Well how much longer is GMAC going to need help from its Uncle Sam?
Roth: Well, Uncle Sam has said he hopes to see a profitable GMAC by March of next year, 2010. GMAC itself is anxious to reach that, too, partly because right now, the government controls how much it can pay its executives. At this point, the government owns about a third of GMAC. It sounds like it’ll probably end up owning even more before this is all done. And that could be significant, because it could give the government more say in how the company is run. It could eventually even appoint members of the board.
Radke: Marketplace’s Alisa Roth. Thanks for that.
Roth: You’re welcome.
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