Federal Panel: GMAC Bailout Will Cost Taxpayers $6.3B

Washington -- Taxpayers likely will lose $6.3 billion or more on the bailout of GMAC Inc., a federal watchdog panel said in a report released Thursday.

The Congressional Oversight Panel, which oversees the $700 billion Wall Street and auto bailouts, sharply criticized the government's $17.2 billion GMAC rescue, saying it "missed opportunities to increase accountability and better protect taxpayers' money," The Detroit News reported.

The Treasury Department should consider recombining GMAC with its former parent, General Motors Co., the panel said. That step "would restore GM's financing operations to the model generally shared by other automotive manufacturers."

Treasury said a merger between GMAC and GM would be up to the companies' boards, not the government."We would not initiate or take a position other than one supported by our board designees," spokeswoman Meg Reilly said.

The government owns 56 percent of GMAC after three separate bailouts since December 2008. The oversight panel said bankruptcy was a viable option for the finance company. "In connection with the Chrysler and GM bankruptcies, Treasury might have been able to orchestrate a strategic bankruptcy for GMAC," it said.

The panel said the bailout "reinforced GMAC's dominance" in dealer financing, and may have prevented the growth of more competition in lending. Unlike GM and Chrysler's bankruptcies, the panel said, the government bailout of GMAC did not require GMAC to present a viable plan for restoring profits, or offer a detailed explanation of how tax dollars would be used increase consumer lending.

GMAC spokeswoman Gina Proia said the company is "focused on the future," and will continue "to provide the highest level of service to auto dealers and consumers," to restore high profits to GMAC and repay the government in full.

GMAC, which lost $10.4 billion last year, is critical to the success of GM and Chrysler because it provides the bulk of financing for the automaker's dealers and consumers who buy their cars.