Ally: Res Cap bankruptcy could cost $1.25 bln

by 30 Apr 2012


(Reuters) - Ally Financial Inc's troubled Residential Capital LLC mortgage unit is "actively considering" filing for bankruptcy, the government-owned auto lender said in a filing Friday.

A ResCap filing could cost Ally between $400 million and $1.25 billion, including its investment in ResCap, according to the quarterly filing.

During an earnings conference call on Thursday, Ally CEO Michael Carpenter said ResCap was considering a range of options from "staying the course" to bankruptcy. Sources have told Reuters that bankruptcy was an option for ResCap, possibly as early as mid-May.

Ally is 73.8 percent owned by the U.S. Treasury after a series of bailouts spurred by its ballooning mortgage losses. The lender hoped to repay taxpayers through an initial public stock offering, but it shelved those plans last year as problems mounted at ResCap and market conditions deteriorated during the European debt crisis.

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