GMAC Financial Services on the Verge of Calling it Quits

X

Hello there! You are new here, you might want to subscribe to our email Newsletter for our Daily Updates.

GMAC Financial Services, previously recognized as General Motors Auto Corporation, is a US-based bank holding company that has dabbled in various forms of lending. Some of the companies that have formed from GMAC Financial Services include Ally Bank, ResCap, GMAC Real Estate, Homecomings Financial, and others included. GMAC offers insurance,  mortgages, auto financing in a variety of countries around the world.

GMAC Financial Services

Earlier in the month, GMAC Financial Services estimated that they will expect a fourth-quarter loss of approximately $5 billion dollars. This comes shortly after the Detroit-based company accepted $13 billion over the last few years to help with the struggling financial sector and mortgage market.

In attempting to avoid any more losses than the company is already facing, GMAC has decided to sell ResCap mortgages, as well as suggesting alternatives to try and lessen the blow of the financial slump the company is facing.

Ally Bank, one of GMAC Financial Service’s banks, is able to essentially ‘hold their own’ to support automotive financing – which GMAC considers its top priority.   GMAC Financial Services are also trying to slowly raise some money, having sold securities to the US Government. This means that the US Government now owns approximately 56% of the company.

This increase in money, about $3.8 billion, will help GMAC Financial Services from keeping ResCap from having to file for bankruptcy.

There are many alternatives that have been explored in regards to what to do about ResCap, in order to ‘cut their losses’ with the dying company. At present time, GMAC Financial Services do not have a solid financial plan for dealing with these losses, but are reinvesting money into their other companies for the time being.

It is difficult to say what will happen with ResCap. One thing is for sure, they are taking their time with making big decisions. GMAC Financial Services believes that the steps they have already taken are a stepping stone to help with any financial hurdles that come about in the near future. Even Chief Executive Officer Michael Carpenter is not sure about what will be happening in a year’s time!

Related Posts

• Knowing Your Banks: Ally Bank Canada
• G20 Stays Away from a Bank Tax
• New Bank Tax is not Imposed
• Increase in Interest Rates may be Eased by Decrease in Inflation
• Flaherty Against Bank Tax for Canada