Former GMAC unit still owes US taxpayer $12 billion in bailout cash, to default and file bankruptcy, 'could affect presidential race,' Reuters

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"The company could default on $1bn of debt on Monday."

5/8/12, "Bankruptcy may be best option for Ally's mortgage unit," Reuters, M. Mott

"If the mortgage unit of loan giant Ally Financial files for bankruptcy this weekend as expected, there will be one immediate reason -- the company could default on $1bn of debt on Monday.

The filing, expected on Sunday night, will mark the latest chapter in the up-and-down history of Residential Capital (ResCap), a former profit engine which in recent years has turned into a dud for its parent company.

But it could also raise serious questions about Ally itself, formerly the financing unit of General Motors known as GMAC, with repercussions that could ripple into the US presidential race.

Ally has previously said a ResCap bankruptcy could cause it to lose between $400m and $1.25bn -- a hefty sum for a company that still owes the Treasury about $12bn in bailout funds.

In the past, Ally has helped bolster ResCap's capital position, and as recently as the fourth quarter of last year, it forgave nearly $200m in inter-company debt.

But with much larger obligations looming just around the corner for ResCap, sources say Ally -- still 74% owned by the US government - will put the struggling business into Chapter 11."... via Climate Depot

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