The Subprime Fallout hits GM

How’s this for subprime fallout? Profits at GM (GM) dropped 90% from last year due to bad loans at its GMAC unit.
This is sad because GM was improving so nicely. Last year, the company only lost $2 billion compared with the $10 billion it lost in 2005.
But now the subprime mess has caught up with GM. Last year, GMAC’s Residential Capital earned $201 million. This year, it lost $905 million. GM had recently sold 49% of its stake in GMAC to Cerberus Capital Management.
Bloomberg noted that the yield on GM bonds due in 2033 fell to 9.2%.

Posted by on May 3rd, 2007 at 9:14 am


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