GMAC Financial Services expects to report a $5 billion net loss in the fourth quarter despite the $3.79 billion cash infusion it has received from the U.S. Treasury Department, CEO Michael Carpenter told analysts this afternoon.
But Carpenter, who took over as GMAC's CEO from Alvaro de Molina on Nov. 16, said the company was taking action to stabilize and restructure its mortgage business and focusing on its auto finance business.
The anticipated loss stems primarily from the restructuring of GMAC's mortgage unit, ResCap, which has avoided bankruptcy because of the government bailouts.
"We are moving forward with our principal mission: strengthening the auto finance business" and transforming it into a "market-driven, low-cost competitor," Carpenter said.
Carpenter also assured analysts that GMAC would repay the federal government on a timely basis, though he offered no timetable.
The government has underwritten $16.3 billion in aid to GMAC. GMAC provides financing to GM and Chrysler dealerships and customers -- and its stability is crucial to keeping financial pipelines open for those dealerships.
As a result of the additional federal aid, the U.S. Treasury currently now holds a 56 percent stake in the company, up from 35.4 percent before the latest aid.
As part of GMAC's original debt restructuring a year ago, GM and private equity firm Cerberus Capital Management LP were forced to reduce their GMAC stakes. GM had held a 49 percept stake and Cerberus' stake was 51 percent.
With the latest moves, Cerberus' stake is 14.9 percent; third party investors own 12.2 percent; an independent trustee for GM owns 9.9 percent; and a GM affiliate owns 6.7 percent.