According to Bloomberg, last Thursday, GMAC loaned its Residential Capital (ResCap) mortgage unit $635m. ResCap needed the money to get a credit line to sell a financing business. On Friday, Standard & Poors lowered GMAC's and ResCap's credit ratings to medium "junk" status. Hang on; wasn't the whole point of separating GMAC from GM to get a better credit rating? Auto loans (GMAC's primary business) packaged as securities aren't affected by the downgrade; they're rated separately. But GMAC will now find it more difficult to get the warehouse funding it needs to accumulate those loans. Reuters quotes a Cerberus spokesman, who said tut-tut. Apparently, GMAC is "a resilient business platform with strong long-term growth prospects." Yes, well, anyone remember Aegis Mortgage?
5 Comments on “GMAC Loans $635M to ResCap; Credit Ratings Suffer...”
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Great picture. That must be from Rabid Rick’s office bathroom.
GS650G
Great picture. That must be from Rabid Rick’s office bathroom.
Nah. The toilet is plain white porcelain, not gold.
In retrospect it was a good thing GM sold half of GMAC. Who would have thought then that GM should have sold all of it.
wasn’t the whole point of separating GMAC from GM to get a better credit rating
Yes, it was to prevent GM from sucking GMAC down with it while it sinks.
However, that doesn’t prevent GMAC from from making its own mistakes and getting punished for it.
That picture just made me “LOL!”