Will GMAC Survive?
Outlook Unlikely…
“Dec. 10 (Bloomberg) — GMAC LLC, the auto and home lender, failed to raise enough capital to become a bank holding company and qualify for federal aid, intensifying concern it will seek bankruptcy protection.
“The lender’s $38 billion debt exchange didn’t lure enough bondholders, leaving GMAC shy of the $30 billion in regulatory capital demanded by the Federal Reserve for it to become a bank, GMAC said in a statement today. GMAC last month asked bondholders to tender their securities for as little as 55 cents in cash or a combination of new notes and preferred stock, which would count as regulatory capital.
“GMAC, the primary lender to General Motors Corp. dealers, is trying to skirt a collapse by becoming a bank and gaining access to the Treasury’s $700 billion rescue fund. As a bank, GMAC would also be able to sell bonds backed by the Federal Deposit Insurance Corp., giving the finance company new funding after being shut out of the public market for bonds backed by auto loans for the past six months.”
Read more: “GMAC Rescue Plan Falters, Raising Bankruptcy Concern”
