The Treasury Department announced late Wednesday it plans a $3.8 billion capital infusion into GMAC, the troubled lender that has already received $12.5 billion in government bailout funds.
The additional funds, as well as the restructuring of the government's commitment to GMAC, will be used to "protect taxpayers and put GMAC in a position to raise private capital and pay back taxpayers as soon as practicable," a release from the agency said.
The money is actually $1.8 billion less than previously anticipated, according to Treasury.
The funds will be provided in the form of $2.54 billion of Trust Preferred Securities [TRUP] and $1.25 billion of Mandatory Convertible Preferred Stock [MCP]. Treasury will receive warrants to purchase an additional $127 million of TRUPs and $63 billion of MCP.
Treasury will also increase its ownership of GMAC from 35% to 56% through a conversion of $3 billion of existing convertible preferred stock. As a result, Treasury will appoint two additional directors to the GMAC board, giving the agency four of nine.
As a result of the past and current bailouts, GMAC will remain under the oversight of the administrations' pay czar, Kenneth Feinberg, and will continue to be subject to limits on executive pay.
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