“The US Treasury said it will purchase a $5 billion stake in GMAC LLC, the financing arm of General Motors Corp.”

“The Fed order says GM will reduce its stake to less than 10 percent of the voting and total equity interest of GMAC. GM’s remaining equity interest in GMAC will be transferred to an independent government-accepted trustee who must dispose of the equity held in the trust within three years of the trust’s creation. Cerberus, which led an investment group that bought a 51-percent stake in GMAC from the automaker for $14 billion in 2006, will reduce its stake in GMAC to no more than 33 percent of the lender’s total equity.”

GMAC and GM have announced a change in an exclusivity agreement between them. The change is described as

“. . . allowing GM the option to offer auto financing incentives through a third-party financing source for two years under some circumstances.

“Under the original 2006 agreement, whenever GM offers financing incentives such as lower interest rates than market rates, it was obliged to do so through GMAC. GM received an annual fee from GMAC for granting the exclusive right . . .”

Do I understand correctly that GMAC was willing to pay for the privilege of making below market loans? I would have thought that the subsidy would have run the other way, i.e., GM would pay GMAC a buy-down fee to subsidize customers and move product.