Is anyone out there? Knock. Knock. This freaking joke of a company just lost $3.9 billion in one freaking quarter. They lost $675 million in the 1st quarter. Then the government told them to start letting subprime borrowers get car loans. Ever see those sleazy Ditech Mortgage ads. Guess what. Ditech is really GMAC. We have poured $13.5 billion into this Titanic of a company as the band is playing and the ship is sinking.
When you see some scumbag driving a BMW you can be sure that it was financed through GMAC and you are footing the bill. How can we allow this to continue?
GMAC May ‘Put ResCap Out of Its Misery,’ CreditSights Says
By Laura Marcinek
Aug. 5 (Bloomberg) -- GMAC Inc., the auto lender that took $13.5 billion of U.S. bailout funds, may cut losses and the need for capital by sending its home mortgage unit, Residential Capital LLC, into bankruptcy, according to CreditSights Inc.
ResCap lost at least $1 billion per quarter since the third period of 2007 and may breach capital covenants in the current quarter, said a report dated yesterday from CreditSights, the debt-rating firm. Detroit-based GMAC could keep ResCap’s “remaining good assets” and leave behind $11.4 billion of debt in a bankruptcy, said the report, which asked whether it was “time to put ResCap out of its misery.”
GMAC was asked about getting rid of ResCap during a conference call with analysts yesterday after the parent company posted a $3.9 billion second-quarter loss -- the biggest among all U.S. lenders -- including an $841 million deficit at ResCap. GMAC’s total mortgage operations lost $2 billion before taxes, CreditSights said.
“The future value may have fallen below the cost of keeping ResCap alive,” said the report, whose New York-based authors included Adam Steer and David Hendler. “We see no real pragmatic reason for GMAC to absorb another $2 billion-plus quarterly hit.”
GMAC must raise $5.6 billion to fill a capital gap found by U.S. stress tests earlier this year. ResCap accounted for a “substantial portion” of losses in the tests, and GMAC could reduce the need for capital by separating itself from the Minneapolis-based mortgage unit, CreditSights said.
“We do believe there is core competency in the U.S. origination business,” GMAC spokeswoman Gina Proia said. “In the past we’ve supported ResCap as long as we believe it’s in the best interest of GMAC stakeholders.”
To contact the reporter on this story: Laura Marcinek in New York at email@example.com