GMAC, the troubled former finance arm of General Motors, has been “stabilized” since the latest government bailout, a special US adviser told a congressional panel Thursday.
Ron Bloom, a senior adviser to the US Treasury for the restructuring of the auto sector, told the Congressional Oversight Panel that GMAC, which has been converted to a bank holding company, is not yet ready for a stock offering.
“We do believe that GMAC has been stabilized,” he said, while adding that the firm “has challenges ahead.”
Bloom said an initial public offering may be “at least a year out” because “capital markets are not fully healed.”
“Sometimes in the future there will be an IPO” that will allow the government to divest some of its stake, he added at a hearing by the panel supervising the 700-billion-dollar Troubled Asset Relief Program (TARP).
In December, the government pumped in another 3.8 billion dollars into GMAC and and took a controlling stake in a bid to turn around the mortgage and auto lender.
The Treasury said the move would raise its equity stake in GMAC to 56 percent from 35 percent.
The ailing former finance arm of General Motors became a bank holding company a year ago to access federal aid amid the global financial meltdown.
The government had injected a total of 12.5 billion dollars in capital into GMAC in two installments.
The bailout funds are part of TARP used to stabilize the US financial system as well as the auto industry.
GMAC was the only one of 10 bank holding companies deemed to have fallen short in efforts to raise enough capital to weather adverse economic circumstances, the Federal Reserve said.
GMAC was the longtime financial arm of the largest US automaker until 2006, when GM sold a majority stake.
In December 2008, GMAC won permission to become a bank holding company to improve its access to Fed lending amid the global financial crisis.
