Capping off a dismal 2009, GMAC CEO Michael A. Carpenter revealed the finance firm is expected to post a $5 billion loss for the fourth quarter of last year. Carpenter blamed the loss on the company’s money losing Residential Capital mortgage unit.
Including the $5 billion fourth quarter loss, GMAC posted more than a $10 billion debt in 2009. GMAC is currently being propped up by $17.2 billion in federal aid.
Although GMAC is heavily involved in the automotive business – the Obama administration named GMAC as the preferred lending arm for General Motors and Chrysler last year – the company’s ResCap business is dragging down its bottom line. The company recently wrote down its ResCap business by $3.8 billion – explaining some of the $5 billion loss – with hopes of making it more attractive to an outside buyer.
Carpenter said GMAC plans to sell some of its mortgage assets, but hasn’t ruled out a partial or full bankruptcy for the ResCap division. “We’ll see what happens,” he told The Detroit Free Press. To make matters worse, ResCap has $2 billion in debt set to mature this year.
Thanks to its $17.2 billion investment in GMAC, the U.S. government now owns a 56.3 percent stake in the finance company. The federal government could also swap another $11 billion in loans for shares in GMAC, which would give the United States greater than a 70 percent stake in the company.
