Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Quick Hits: GMAC, Bank Holding Company Reject


Brief scrutiny of today's headlines.

It doesn't look like GMAC will become a bank holding company, unlike Goldman Sachs (GS), Morgan Stanley (MS) and American Express (AXP).

GMAC, the financing arm of General Motors (GM), and its mortgage unit, Residential Capital, haven't been able to raise enough capital to make the switch, increasing the possibility that GMAC will file for bankruptcy protection.

GMAC's planned $38 billion debt exchange didn't attract enough interest from debt holders to complete the deal. The company is about $30 billion short of the minimum capital demanded by the Federal Reserve to become a bank holding company.

GMAC sought to become a bank holding company because it then would be permitted to accept customer deposits, creating a fresh source of funds and allowing it to participate in federal rescue programs. Congress appears to be wrapping up a bailout package for the automakers; the deal could be completed this week.

In November 2006, General Motors sold about 51% of GMAC to a private equity group led by Cerberus Capital Management. GMAC has lost about $8 billion in the last 5 quarters, due to declining GM sales and mortgage defaults.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos