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ResCap Still a Burden for GMAC.
New York -- A big loss at subsidiary Residential Capital, which has been pummeled by the subprime mortgage crisis, pushed GMAC Financial Services into the red for the fourth quarter of 2007. GMAC attributed its $724 million fourth-quarter loss largely to a $921 million net loss at the ResCap unit. Writedowns of credit residuals and MBS, higher funding costs, market-driven impairment on real estate assets and equity investments, and restructuring charges all contributed to the ResCap loss, the company said. Layoffs continued in the fourth quarter, as ResCap trimmed its workforce by another 3,000 positions.
In all of 2007, ResCap reduced its workforce by 5,000 employees, or about 35%. Falling home prices, higher delinquencies and limited market liquidity continued to hurt ResCap's performance. During the fourth quarter, ResCap said it sold residual cash flows related to several on-balance-sheet securitizations. All told, the company unloaded $22 billion of securitized assets and collateralized debt obligations from its balance sheet during the fourth quarter. Following that action, the company said its provision for loan losses should decline in future quarters.
The company's problems were no longer ...
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