Well now we learn that GMAC Financial Services is in ‘advanced' talks with the U.S. Treasury Department working on another bailout of the troubled company. In what would be the third time the company needs bailing out; the amount of tax payer money being discussed to accomplish this next bailout could reach as high as $5.6 Billion.

In a stark reminder of how some battered financial firms remain dependent on government lifelines, GMAC Financial Services Inc. and the Treasury Department are in advanced talks to prop up the lender with its third helping of taxpayer money, people familiar with the matter said.

The U.S. government is likely to inject $2.8 billion to $5.6 billion of capital into the Detroit company, on top of the $12.5 billion that GMAC has received since December 2008, these people said. The latest infusion would come in the form of preferred stock. The government's 35.4% stake in the company could increase if existing shares eventually are converted into common equity.

The willingness by Treasury officials to deepen taxpayer exposure to GMAC reflects the troubled company's importance to the revival of the auto industry. Founded in 1919, GMAC has $181 billion in assets and is a major financier for 15 million borrowers and thousands of General Motors and Chrysler car dealerships in the U.S.

The new capital would help firm up GMAC's balance sheet and solidify its auto-loan business. GMAC provides the vast majority of wholesale financing for GM dealerships across the country, meaning scores of local distributors would be unable to bring new vehicles onto their lots if GMAC were to collapse.

Federal officials also are moving to shore up GMAC's ability to fund its daily operations, with the Federal Deposit Insurance Corp. telling the company Tuesday the agency will guarantee an additional $2.9 billion in debt, according to people familiar with the discussions. The FDIC guarantee will make it easier for the company to sell debt to investors. The FDIC backed $4.5 billion in GMAC-issued debt earlier this year.(...) (Source WSJ) – Thanks Butch for the tip

I guess Obama meant no ‘new' bailouts. Somewhere in his speech is probably some fine print that says companies that have already been bailed out are not included and can continue to be bailed out over and over again.

Remember that in December of 2008 GMAC asked to be considered a ‘bank holding company' even though they are not a bank. That status was given to them so that they could borrow money through the Fed and to this day GMAC (who issues loans for cars through dealer networks)  has no public branches allowing people to deposit money and have checking accounts. All they did to make it look like they are a real (cough) bank is they have a website allowing people to open a savings account online. And you would have to electronically transfer funds to the account because they have no retail branches. Would you want to give them your money? Not me, no way on earth would I trust GMAC to hold my money.

Makes me sick…