The government will be channeling $7.5 billion more bailout funds into GMAC to help the struggling automotive industry. It’s good news then that GMAC will not be making it a one-sided affair as it is now looking into cutting $1 billion in costs.
The government has tapped GMAC to be the entity to aid the dealers and customers of GM and Chrysler and the fresh capital is to help GMAC operate and continue handing out financing services.
Aside from handling General Motor’s financing service, GMAC was also in the housing market. GMAC took a big hit in both the auto industry and housing market crashes losing a lot of money in mortgage defaults and auto sales drop.
The cost-cutting measures are part of the massive restructuring not only of the company but the whole auto industry.
GMAC has already received $12.5 billion in government funds including the recent $7.5 billion. With the infusion, Treasury Department assumes control of 35.4% of the company’s equity stake.
Source: CNN
