Only days after GMAC qualified as a bank holding company and became eligible for bailout funds from the federal government, the Treasury Department has purchased a $5 billion stake to infuse liquidity into the company, which provides 80% of the financing for the purchase of GM and Chrysler vehicles:
 

The U.S. Treasury Department late today said it will commit $6 billion of taxpayer money to GMAC LLC “as part of a broader program to assist the domestic automotive industry in becoming financially viable.”…

In an announcement, the department said it will purchase a $5 billion stake in the lender, which has been jointly owned by Cerberus Capital Management LP and General Motors.

In addition, the government is lending up to $1 billion more to GM so that it can participate in a rights offering at GMAC connected to the lender’s reorganization as a bank holding company. The $1 billion comes in addition to $13.4 billion the government has promised GM by mid-February to keep it from running out of cash.

The equity purchase gives the government $5 billion worth of preferred stock in the company, which are required to pay dividends of 5% per year for the first five years and 9% thereafter. The bailout funds also come with limits on executive pay. The article notes that GMAC has lost nearly $8 billion in the last five quarters.