GMAC Expects $5bn Loss in Q409

After receiving a third capital injection from the US government, GMAC expects a $5bn loss in the Q409, according to a presentation to investors today, with the majority of the loss coming from its mortgage operations. Of the losses, GMAC faces a $3.8bn pre-tax charge for a set of high-risk mortgage loans that GMAC will try to sell at current, depressed market values to third-party investors. Before the New Year, the US taxpayer bought a majority interest in GMAC after a $3.79bn bailout from the US Treasury Department, pushing the total to $16.3bn. As a result, the US government now owns 56% of GMAC. Along with the completion of a two-part capital investment under the Supervisory Capital Assessment Program (SCAP) and increased repurchase reserve liabilities, GMAC points to additional loss allowances and discounted operations as drivers behind the fourth-quarter loss. The $3.79bn injection allows GMAC to achieve the required SCAP capital buffer to meet the worse-than-expected scenario, down from the $5.6bn remaining on that requirement announced in May 2009. Despite the expected loss, GMAC expects to hold a total capital ratio above 15% after the investments from the Treasury. GMAC’s new maneuvers attempt to fan the flames of its still-reeling Residential Capital subprime-mortgage lending unit. ResCap lost $2.7bn through the first three quarters of 2009 and $9.96bn in 2008 and 2007. “We believe this adequately capitalizes them for the near future,” said Robert Hull, GMAC’s chief financial officer during the presentation. Write to Jon Prior.

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