US Fed: GMAC Needs To Raise, Improve Capital
By Luca DiLeo and Darrell A. Hughes, Of DOW JONES NEWSIRES
WASHINGTON -(Dow Jones)- The U.S. Federal Reserve said Monday that GMAC
Financial Services was the only one of 10 bank-holding companies that hasn't yet
met capital requirements under its stress tests.
However, the central bank said in a statement that GMAC is expected to meet
the capital ratios that are required by accessing the U.S. Treasury Department's
Troubled Asset Relief Program, or TARP, automotive-industry financing program.
Despite extraordinary help from the U.S. government, including $12.5 billion
of federal funds and access to cheap debt, GMAC is struggling to return to the
black as it takes hit after hit on its mortgage unit, Residential Capital LLC.
GMAC is in talks with the U.S. Treasury to get a third infusion of up to $5.6
billion in TARP funds.
The Fed said the other nine bank-holding companies that were found not to meet
capital requirements earlier this year had now raised enough capital or improved
the quality of capital sufficiently. It said the 10 companies, including GMAC,
had issued a total $39 billion in common stock or other eligible securities.
In its so-called stress tests of 19 large banks earlier this year, Fed
economists designed dire economic scenarios and measured the resilience of big
banks against those scenarios. Fed officials expect to make those stress tests a
model for future supervision.
-By Luca Di Leo, Dow Jones Newswires; 202 862 6682; luca.dileo@dowjones.com
(END) Dow Jones Newswires
11-09-091518ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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