When the government offered GMAC's old shareholders a free ride, how could they turn it down?

You would think, at this point, that there would be nothing left to be outraged about when it comes to government bailouts. But the more bailout rocks you turn over, the more well-connected players you find who aren't being forced to pay the full price of their mistakes. One of the little-noticed rocks I've looked under recently: the government's rescue of GMAC, now Ally Financial, which has given its old shareholders a multibillion-dollar windfall.

These folks thought they had a great deal in 2006. General Motors (GM), which had owned GMAC (the name I'm using throughout this column for simplicity's sake), was thrilled to have investors led by Cerberus, the big, smart Wall Street house, fork over $7.2 billion for a 51% stake. Oops. The ink had barely dried when GMAC's mortgage business, much of it subprime, turned from a crown jewel into toxic waste. The world financial system began imploding. GMAC ran out of borrowing power and got government help to stay afloat in late 2008, the first of several bailout infusions. Without the bailout, GMAC would have gone broke, and the old holders' stake would have been worth zippo. What's that stake worth now, mostly because of taxpayer support? Would you believe more than $3 billion? The shares owned by the Cerberus-led investors are worth $2 billion by my conservative math, and GM's stake is worth $1.2 billion.

Those numbers -- which you've probably not seen before -- are based on the value the Treasury placed on GMAC's common stock at year-end, when it converted some of its preferred shares to common shares. The price, $10,340 a share, is GMAC's stated net worth; a stock offering, should one occur, would probably fetch a higher price. The Treasury agrees that allowing GMAC's old shareholders this kind of value wasn't optimal. "One of the unavoidable consequences of not filing GMAC for bankruptcy was that the equity stakes of the legacy shareholders, Cerberus and GM, were not completely wiped out," says Tom Casarella, a top Treasury restructuring expert. However, he says, "we don't think there was a better way to do the bailout, keep GMAC solvent, and protect both the U.S. auto industry and the taxpayers' investment."

The government, probably rightly, felt it had to bail out GMAC because the firm provided about 75% of the "floor plan" financing that dealers use to buy vehicles from GM. Floor-plan finance, unlike retail vehicle finance, is specialized and complex, and has relatively few players. The government feared that if GMAC croaked in the midst of a financial crisis, 75% of GM dealers' floor-plan financing would vanish. As would 75% of GM's sales. As would GM.

So you see why the government didn't dare let GMAC go into bankruptcy. The problem, of course, is that the old GMAC shareholders -- the Cerberus investors and GM -- got a free ride of sorts on the government's nickel. Instead of owning 100% of a company worth nothing, they now own 26% of a company with a stated value of more than $12 billion.

To be fair (three of journalism's most dangerous words), Cerberus's investors did put money into the GMAC bailout pot alongside Uncle Sam in 2008. They kicked in $750 million in cash and GMAC securities. So you can argue -- as I'm sure Cerberus would if it hadn't declined comment -- that its investors bought most of their current stake; it wasn't a total gift from Uncle Sam. Yes, Cerberus is still down $6 billion on an $8 billion investment -- but absent Uncle, it would be down $7.2 billion on a $7.2 billion investment.

By contrast, the $1.2 billion value of the stake owned by GM sure looks gifty -- yet another taxpayer-financed indulgence for GM, which Uncle Sam has kept alive, recapitalized, and coddled endlessly. The money GM put into recapitalizing GMAC in 2008 -- $884 million -- came from the Treasury.

Yes, in a world of multitrillion-dollar bailouts, having big players get a windfall of $2.5 billion or so may seem like small beer. (Math: That's the $3.2 billion value of the Cerberus-GM stake, less the $750 million Cerberus put up in 2008.) But small beer is still beer. Struggling small businesses and unemployed people would kill for a deal like that. But don't hold your breath until they get it.