Writes off another $5 billion using our money, of course.
[T] he company waited far longer than its larger competitors to acknowledge that its mortgage assets had lost much of their value.
”This was overdue, and I’m surprised they didn’t do it until now,” said Guy Cecala, publisher of Inside Mortgage Finance.
He explained that most banks now value mortgage assets at what they are expected to fetch on the market. By classifying its mortgage securities as ”held for investment,” GMAC was able to postpone the inevitable writedowns.
GMAC’s fast disposal of its latest bailout is a sign the bank is not nearly ready to survive without government support, Cecala said.
”The real question is, is this the last capital infusion they’ll need,” he said. ”I haven’t seen any evidence that it is.”Asked to elaborate about the potential alternatives for ResCap, Carpenter called it ”a relatively blank sheet of paper. We will almost certainly sell some of the mortgage assets. We will look at strategic alternatives for various other businesses and activities and we’ll see what happens.”
GMAC also provided details on an additional $3.3 billion in a recently disclosed mortgage-related write-downs for its mortgage division.
Options for ResCap include selling the unit, selling off its bad assets but keeping the subsidiary or putting it into bankruptcy.
The assets were marked down steeply enough that there should be buyers for them, said Tom Marano, head of GMAC’s mortgage operations. However, that could change if the housing market does not recover, Marano said.
For now, ”we do believe we can sell these assets in the markets,” he said.