This story appeared in Bank Digest
The Treasury Department has announced that it is acting on its previously announced commitment to provide capital to GMAC as identified in May 2009 under the Supervisory Capital Assessment Program (SCAP). In May, SCAP identified an additional capital need of $5.6 billion for GMAC. Due to a variety of factors, including that the restructurings of General Motors and Chrysler were accomplished with less disruption to GMAC than banking supervisors initially projected, Treasury will commit $3.8 billion of new capital to GMAC, rather than the $5.6 billion originally announced, resulting in a $1.8 billion reduction in Treasury’s previously forecasted Troubled Asset Relief Program expenditures. The $3.8 billion of new capital will be provided in the form of $2.54 billion of Trust Preferred Securities (TRUPs), which are senior to all other capital securities of GMAC, and $1.25 billion of Mandatory Convertible Preferred Stock (MCP). In connection with providing this capital, the Treasury will also receive warrants to purchase an additional $127 million of TRUPs and $63 million of MCP, which it will exercise immediately at the closing of the transaction.