GMAC has been struggling mightily during the recession affecting not only the United States but also the entire world. GMAC is reporting that it lost $5 billion in the fourth quarter of 2009 alone. GMAC is an auto lender that has faced large struggles in its mortgage division. The $5 billion loss in the fourth quarter of 2009 is largely blamed on a $3.8 billion pre-tax charge that has reflected the decline in the value of the company’s mortgage investments, which it plans to sell.
GMAC is based in Detroit and recently received an additional $3.8 billion in federal aid. GMAC has tried, time and again, to raise the money it needs to rid themselves of their debt from private investors. With the latest $3.8 billion payment in federal aide, GMAC has now received up to $16.3 billion in federal aide over the past couple of years. The Treasury Department has a stake in GMAC, which stood at 35 percent, until the department announced that it would increase its stake to 56 percent.
GMAC provides the majority of its loans to General Motors, Chrysler dealerships, and to the customers of both General Motors and Chrysler. The company used to be owned by GM but also had a stake in the mortgage industry when the housing boom took effect some years ago. GMAC lost a total of $13 billion over the past three years as its borrowers defaulted on their loans. The company that bought GMAC from GM in 2006 is Cerberus. Cerberus still owns a 15 percent stake in the company. Cerberus might benefit from the latest federal aid provided to GMAC if that aid helps, GMAC will turn it around in terms of its bottom line.
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