Geithner: GMAC Will Get Federal Funding, but Less than Expected

Washington - Treasury Secretary Timothy Geithner said GMAC will get less than the $5.6 billion in additional federal support that the government was considering, reported The Detroit News.

Geithner said the amount likely will be "a little lower than we anticipated," but he didn't say when it might be announced.

Detroit-based GMAC and the Treasury Department have been in talks to finalize the amount of new capital, in exchange for equity and stock. The lender, which has received $13.4 billion in government capital, has asked the U.S. Treasury to hold off on making the new capital infusion, so it can assess how much is needed.

As a result of the previous investment, the Treasury holds a 35.4 percent stake in GMAC, which provides loans for buyers of General Motors Co. and Chrysler Group LLC vehicles.

Unlike other financial institutions that went through "stress tests" to assess their financial health, GMAC couldn't raise enough outside capital to assure regulators that it was prepared for a new downturn.

"We said, 'If you do not raise capital from the private markets, if you are unable to, we will put capital into you because it is important to the stability of the system,' " Geithner said. "It was never going to be possible for GMAC. They are in a unique and difficult situation."