New Year, New Federally-Owned GMAC
Mike Brownfield /
If President Barack Obama’s New Year’s resolution was for the federal government to stop taking majority ownership in private corporations, he’s off to a bad start (or he decided to get one more in before 2010).
Yesterday, the government indicated it will provide $3.8 billion in additional aid to GMAC and increase its stake in the company from 35% to a whopping 56%. As The Washington Post reports, the federal government now has ownership stakes in GMAC, Fannie Mae, Freddie Mac, General Motors, and American International Group – and holds large stakes in Citigroup and Chrysler.
And the grand tally of government (read: “taxpayer”) investment in GMAC? $16.3 billion.
Where is the money going? It’s going to pay for GMAC’s billions of dollars in losses it suffered after it moved into the subprime lending business (away from its traditional lending to car buyers and dealers at GM and Chrysler).