After a big fourth quarter loss, private equity player Cerberus may regret buying a controlling interest in GMAC.
The head of Cerberus said in a note to clients picked up by Reuters "… if the credit markets continue to decline and we find ourselves in a prolonged environment of capital market shutdown, GMAC could run into substantial difficulty." The home lending and auto financing parts of GMAC are likely to face a vicious downturn as the year wears on.
What is not clear is what Cerberus will do if its situation is dire. Does it default on its debt? Go into Chapter 11? Or seek some assistance from General Motors (GM)?
The answer to that was not in the Cerberus note.
Douglas A. McIntyre
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