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Banking, finance, and taxes

GMAC: An Explosion In The Boiler Room For Cerberus

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By Douglas A. McIntyre Updated Published
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95129cCerberus has invested billions of dollars into the US auto industry. Its best-known deal was its purchase of 80% of Chrysler. That investment is probably worth nothing. Its other highly visible deal was the acquisition of 51% of GM’s (GM) financial arm, GMAC.

News on earnings from GMAC indicates that it may be worthless as well.

According to Reuters, "Finance company GMAC LLC lost $2.52 billion in the third quarter, hurt by the housing slump and vehicle lease writedowns, and said its mortgage unit, one of the nation’s largest home loan providers, may not survive." What happens to ResCap, the mortgage operation? No one knows.

GM reports GMAC earnings at part of its own quarterly filings. Whether it has liability for ResCap’s liabilities is not clear. Nor is the extent to which Cerberus is one the hook.

A lot of private equity and venture firms are in very deep trouble. Cerberus may be one of them.

Douglas A. McIntyre

Photo of Douglas A. McIntyre
About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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