GMAC's $60 Billion Deal Loses Confidence as Mortgages Burn Cash

Bloomberg (06/23/08); Levy, Ari; Salas, Caroline
In May, banks led by JPMorgan Chase & Co. and Citigroup Inc. provided GMAC and its Residential Capital LLC mortgage unit with the largest restructuring package since the credit crisis began a year ago. Whether that is enough to survive the worst housing slump in decades and offset ResCap's mounting financial losses is unknown. The ResCap subsidiary was hit hard by the subprime mortgage debacle, losing more than $4.3 billion in 2007 and contributing to a $2.3 billion loss for its parent company. The unit must now come up with enough money to repay $3.5 billion of bonds and a $3.5 billion loan from GMAC in 2010.