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GMAC Execs to Testify About Taxpayer Bailout

February 19, 2010
2 min to read


WASHINGTON - GMAC Inc.'s CEO will testify before a congressional panel next week on the government's $17.2 billion bailout of the troubled Detroit auto finance company, reported The Detroit News. The Congressional Oversight Panel, created to oversee the $700 billion Wall Street and auto bailout fund, will hold a hearing Thursday attended by GMAC CEO Michael Carpenter and Chief Financial Officer Robert Hull, and Ron Bloom, the Obama administration's senior adviser. The Treasury holds a majority stake in the Detroit lender, which was wholly owned by General Motors until 2006. Carpenter, a board member, was named CEO in November. The company lost $10.3 billion in 2009 amid heavy losses in its troubled mortgage unit, ResCap. The Congressional Oversight Panel, in a report last month, criticized the government's $17.2 billion bailout of GMAC. Its aid has come in three separate rounds, with the latest $3.8 billion infusion on Dec. 30. That includes nearly $900 million the government loaned General Motors to invest in GMAC. GMAC spokeswoman Gina Proia told The Detroit News the company will share with the panel "details of our turnaround plan." In the process, the Treasury Department acquired a 56 percent majority stake in the company, up from its 35.4 percent stake. GMAC's bailout and the rescue of GM and Chrysler Group LLC were funded by a total of $86 billion of the $700 billion Troubled Asset Relief Program. Last year, the Treasury Department projected it would lose $30.4 billion on the auto bailout. GMAC was the only one of the financial institutions subjected to "stress tests" of their financial wherewithal to get more government assistance. "Treasury has not yet articulated a specific and convincing reason to support the company," the panel says. "In the face of criticism about the merits of saving GMAC, Treasury owes the public a more detailed and convincing explanation not only of its rationale for providing substantial assistance to GMAC, but also of its rationale for treating GMAC differently than other stress-tested institutions." Treasury officials argue that if it refused to give GMAC more money "after providing assistance to GM and Chrysler, it would undermine its own investments in the automotive companies." GMAC said it was committed to repaying the taxpayers.

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