GM’s financing arm, GMAC was the only entity to be bailed out by a full three rounds of aid and the only bank whereby the U.S. government still holds a majority stake.
Heat is picking up in regards to why GMAC received such special attention.
They also questioned whether the rescue of GMAC, achieved in part by making it a bank, had created a long-term situation in which the government guarantee of bank deposits was subsidizing sales at General Motors and Chrysler.
GMAC is the primary source of financing for GM and Chrysler dealers, and a major source of loans for buyers of their vehicles. Elizabeth Warren, a Harvard law professor who chairs the panel, said she understood GMAC’s utility for GM and Chrysler.
“What I don’t understand,” she said, “is what the justification is for being an independent bank that takes deposits that has a backup from the United States government.”
Ron Bloom, a senior adviser to Treasury Secretary Timothy F. Geithner, told the panel that the rescue of GMAC was necessary to save the automakers, and that the $17.2 billion price tag was a good deal for taxpayers. He said that no other lender or combination of lenders could have quickly replaced GMAC’s role in the marketplace.