Image by Getty Images via Daylife
By Colin Barr
Now that Citigroup and AIG are rolling in the bucks, GMAC is looking like the most egregious zombie bank of them all.
A report released Thursday questions the wisdom of the government's decision to spend $17 billion propping up the money-losing maker of car and home loans.
The report, released by theCongressional Oversight Panel, noted that the White House thinks taxpayers will lose at least $6 billion on the GMAC bailout. Two members of the panel projected that losses could reach $10 billion, based on the expected cost of the bailouts of GM and Chrysler.
But that's not the worst of it. Thanks to Treasury's decision to avoid a comprehensive restructuring of the company, pre-bailout shareholders in GMAC -- including private equity firm Cerberus -- could still profit on their investments, the report said.
And while the costs are mounting, the panel, chaired by Harvard law professor Elizabeth Warren, said it remains unclear what Treasury accomplished by shielding GMAC from bankruptcy.
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