Mortgage Unit Troubles Ally Financial
WHEN General Motors was bailed out, the government sank $17 billion of taxpayers’ money into G.M.’s troubled finance arm, GMAC.
Three years on, we’re still waiting for the payback.
While the Treasury Department sold most of its holdings in G.M. last year, it unloaded only a small portion of its stake in GMAC, which is now known as Ally Financial. Taxpayers today own roughly a quarter of G.M., but they still own 74 percent of Ally.
G.M. is making a lot of money (last week, it reported a first-quarter profit of $1.32 billion) but all is not going smoothly at Ally. While the company’s overall numbers are improving, its mortgage unit is in deep trouble.
That unit, Residential Capital, missed a $20 million debt payment in mid-April. Given that it has roughly $300 million in debt payments coming due from now till June, speculation is rife that ResCap will file for bankruptcy.