GMAC given new $3.8bn bail-out

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The US finance group, GMAC, will receive a further $3.8bn from the federal government to cover losses incurred on its mortgages.

The money is below the $5.6bn earmarked for the company, but it comes on top of the $12.5bn it has already been given.

The company is the former finance arm of General Motors, but a third of its balance sheet is mortgage finance.

That sector is still losing money - and the loss is on course to be another $3.3bn in the fourth quarter.

The US Treasury Department's statement said GMAC had needed less help than it had planned for, because the restructurings of General Motors and Chrysler were accomplished with less disruption to GMAC than banking supervisors initially projected.

GMAC has received billions of dollars of government aid to combat mortgage losses and to provide funds for Americans to buy cars.

Core finance

It is also critical for thousands of car dealers, who use its funds to stock their showrooms.

It is one of the companies worst hit by the financial downturn. In December 2008, the government stepped in with a $6bn bail-out.

Then, in May 2009, the Treasury announced that it would provide billions more in aid.

GMAC became an independent finance company in 2006 after GM sold a 51% stake in the business.

Its mortgage business, Residential Capital, known as ResCap, has lost $10bn in the past three years.