G-MAC, 'Sets Us Up' the Mortgage Bomb; $1 Billion Losses From One Firm This Quarter

May 3, 2007 (EIRNS)--Some investment banks' estimates of $20 billion in total losses in the mortgage-backed securities markets, were exposed as far too low; one major firm alone lost nearly $1 billion in just the first quarter of 2007.

The three top credit-rating agencies all downgraded their outlooks for Residential Capital (ResCap, part of General Motors Acceptance Corporation or GMAC) to "negative," after the Bloomington, Minnesota mortgage company acknowledged its mortgage losses on May 2, according to the Minneapolis Star-Tribune. ResCap lost $910 million, and is laying off 1,000 employees.

GMAC, which used to be the financial engine pulling up GM's auto operations, is now transformed by the mortgage collapse into a big money-loser, half-owned by GM and half by the huge Cerberus hedge fund.