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GMAC Likely to be Taxed as U.S. Recoups Bailout Funds

January 22, 2010
1 min to read


WASHINGTON - GMAC Financial Services is likely to be taxed under a new Obama administration proposal to impose a levy on U.S. banks to recoup bailout money -- even as General Motors Co. and Chrysler Group are being exempted, reported Automotive News.

The administration hasn’t decided how much each bank would pay or when it would make a final decision on which institutions to include in its proposal, a Treasury Department spokeswoman told Automotive News.

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If approved by Congress, the new tax would require banks including J.P. Morgan Chase & Co., Citigroup Inc. and Bank of America Corp. to pay a total of $90 billion over 10 years. The revenue would cover most of the expected $117 billion loss to Treasury’s Troubled Asset Relief Program. The Bush administration initiated TARP in 2008 to bail out financial institutions.

GMAC’s financial stability is crucial to the auto industry because it provides floorplan financing to GM and Chrysler dealerships and also finances consumer auto loans. GMAC has received a $16.3 billion investment from the federal government, which now owns 56 percent of the lender.

The new tax would apply to companies with more than $50 billion in assets, a Treasury Department fact sheet said. Over 60 percent of the anticipated revenue probably would be paid by the 10 biggest financial institutions.

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