On May 2, 2007, Standard&Poor's Ratings Services affirmed its 'BB+/B-1' counterparty credit rating on GMAC LLC (GMAC). The outlook was revised to negative from developing. At the same time, we lowered our counterparty credit rating on GMAC's 100%-owned subsidiary, Residential Cap LLC, to 'BBB-/A-3' from 'BBB/A-3'. The outlook on Residential Cap is stable. The revision of GMAC's outlook and the downgrade of Residential Cap reflect massive additional losses at Residential Cap's subprime mortgage business, totaling $910 million after-tax in first-quarter 2007. These losses caused GMAC overall to be unprofitable (net loss of $305 million), notwithstanding strong performance by GMAC's automotive finance, insurance, and other businesses. Residential Cap's loss was significantly worse than we had anticipated. We now believe
