ResCap's Bleeding 'Stopped'
GMAC Inc.'s chief executive Michael Carpenter sought to reassure investors - as his predecessor Alvaro de Molina did before him - that the bleeding at its Residential Capital LLC unit has stopped.
On a conference call, Mr. Carpenter said GMAC expects to "fully resolve the challenges related to ResCap and the legacy mortgage business to minimize its impact on the company."
Additionally, a spokeswoman for GMAC said despite media reports to the contrary, that ResCap, as a company, is not necessarily for sale. In an e-mail, the spokeswoman said GMAC is "exploring strategic alternatives" for ResCap including asset sales. As reported, ResCap lost $4 billion in the fourth quarter and $9.2 billion over the previous eight quarters. Mr. Carpenter told investors,
"You will see steady progress month by month, quarter by quarter." Part of the reason for such optimism is that in December, GMAC marked down certain loans to 40 cents on the dollar, from 70 cents, and transferred the assets from the Ally Bank unit to ResCap, resulting in a $2.6 billion loss in the quarter.
"We expect the majority of the losses related to legacy assets are behind us," said Robert Hull, GMAC's chief financial officer.