GMAC
From Wikipedia, the free encyclopedia
| GMAC | |
|---|---|
 |
|
| Type | Private |
| Founded | 1919 |
| Headquarters |  Detroit, MichiganUSA |
| Key people | Eric Feldstein CEO |
| Industry | Financial Services |
| Products | Mortgage loans |
| Revenue | ▼ US$21.187 Billion (2007) |
| Net income | ▼ US$(2.332) Billion (2007) |
| Employees | 31,400 (2006) |
| Website | www.gmacfs.com |
GMAC (or GMAC Financial Services), formerly known as General Motors Acceptance Corporation, was previously the wholly owned financial services arm of General Motors.
GMAC Financial Services provide a suite of financial programs including automotive financing, insurance and mortgage operations in approximately 40 countries around the world.
GMAC also operates Nuvell Financial Services within its automotive financing division. While the main GMAC specializes in the financing of new and Certified Pre-Owned ("used") GM vehicles, Nuvell is the subprime lending arm of GMAC for GM associated dealerships. Nuvell also operates National Auto Finance which provides non-GM dealerships access to an additonal subprime lending source, and recently a pime product. Its other businesses include ResCap Holding, an umbrella company for GMAC's residential mortgage business, and GMAC Home Services, a real estate services subsidiary. As well, it is an associate sponsor of all Hendrick Motorsports racing teams.
ResCap Holding is the parent for GMAC Mortgage, GMAC-RFC, GMAC Bank, Ditech.com, and Homecomings Financial.
GMAC Home Services is the parent for GMAC Real Estate, formed by the purchase of Better Homes and Gardens Real Estate in 1998, GMAC Global Relocation Services, and GHS Mortgage.
[edit] Divestiture
To raise money for reorganization, General Motors divested various assets including GMAC. This divestiture was accelerated at the prompting of investor Kirk Kerkorian and his former representative on GM's board, Jerome York.
On March 23, 2006, General Motors announced that it completed the sale of a 78% interest in GMAC Commercial Holding, its commercial real estate subsidiary, for $1.5 billion in cash to a private investment group including Kohlberg Kravis Roberts & Co., Five Mile Capital Partners and Goldman Sachs Capital Partners. The deal includes the payoff of all intracompany debt owed to GMAC, bringing the total value of the deal to $9 billion. The new entity, in which GMAC owns a 21% interest, is known as Capmark Financial Group, Inc.
On April 3, 2006, GM announced that it would sell 51% of GMAC as a whole to a consortium led by Cerberus Capital Management, raising $14 billion over 3 years. Investors also include Citigroup's private equity arm and Aozora Bank of Japan. The group will pay GM $7.4 billion in cash at closing. GM will retain approximately $20 billion in automobile financing worth an estimated $4 billion over three years.
The sale was completed in November of 2006.
[edit] McNamara - GMAC Defrauded
 |
This section does not cite any references or sources. (January 2008) Please help improve this section by adding citations to reliable sources. Unverifiable material may be challenged and removed. |
Between 1980 and 1991, GMAC was the victim of an admitted US$6.2 billion fraud involving a Long Island Buick-Pontiac dealer named John McNamara. McNamara borrowed the money over the course of 11 years taking out loans for vans, purportedly destined for export to Cyprus, that did not exist. When the fraud was eventually discovered it resulted in approximately $436 million in unpaid inventory financing.
In 1992 John McNamara pleaded guilty to the fraud. In exchange for his testimony on other unrelated bribery and corruption allegations, that did not result in any convictions, the Government sought a lower sentence than the 20 years in prison that were possible. In 1996 he was sentenced to 5 years in prison, but was released early.
GMAC conducted an in-depth analysis of the events that had enabled the fraud to take place. This investigation resulted in a significant re-structuring of the commercial credit operations of the company.
