Financial Regulatory Forum

Treasury to dole out $3.8 billion to GMAC, raise stake

By Karey Wutkowski and Corbett Daly

WASHINGTON, Dec 30 (Reuters) – The U.S. is injecting another $3.8 billion into GMAC Financial Services to help cover mortgage losses, in a bailout that makes the government the majority owner of the auto and home finance company.

GMAC said after the capital infusion it does not expect to record more major losses from its mortgage lending unit, which should help stabilize results.

The company is one of the largest car loan makers in the United States, and earning profit will give it more capacity to make loans and eventually pay back the government.

(To see government announcement, please click here.)

Many analysts see GMAC’s mortgage assets, which make up about a third of the company’s $178.2 billion balance sheet, as the main obstacle to the lender reaching profitability.

Those assets have already forced GMAC to seek new funds. Before Wednesday’s capital infusion, GMAC had already received $12.5 billion of aid from the United States.

US pay czar caps more salaries at bailed out firms

By Karey Wutkowski and Steve Eder

WASHINGTON/NEW YORK, Dec 11 (Reuters) – The U.S. pay czar on Friday expanded a crackdown on pay packages at four companies rescued with taxpayer money, limiting most cash salaries at $500,000 for a second tier of top earners.

The Treasury Department’s Kenneth Feinberg issued the new limits amid outcries from some companies on a government lifeline that they cannot retain or attract key employees, sending the firms racing for a bailout exit.

He set the compensation structures for the 26th through 100th highest-paid employees at four firms: Citigroup Inc, American International Group, General Motors Co, and GMAC.

US Treasury will close Capital Assistance Program

WASHINGTON, Nov 9 (Reuters) – The U.S. Treasury Department said on Monday it will immediately close its Capital Assistance Program, set up last spring for bank stress tests, because the only firm needing taxpayer funds will use an auto industry support program instead.

(more…)

  •