The ratings on GMAC LLC (GMAC) reflect the significant risks facing the company, including the acute stress at GMAC's 100% mortgage lending subsidiary, Residential Capital LLC (B/Negative/C); recent asset quality deterioration in its auto portfolio; increased funding pressures; and potentially increased operating pressures as a result of GMAC's close business ties to its 49% owner, GM (B/CreditWatch Neg/B-3). The ratings also reflect modest diversity benefits afforded GMAC from its insurance businesses and its significant long-range growth potential. Standard&Poor's Ratings Services recently lowered its ratings on GMAC, largely because of poor performance at Residential Capital LLC. The 2007 loss at Residential Capital LLC of $4.3 billion was partially offset by various capital-raising transactions, but nevertheless increased our concern regarding
