GMAC to Focus on Auto Business

As soon as Michael A. Carpenter was appointed new chief financial officer for GMAC Financial, the new CEO steeped into the spotlight and said that the company he now leads will keep the automotive business at the center of its future endeavors. The reason behind this choice is very simple, the CEO believes.

“The first priority is to support the auto industry within the bounds of reasonable credit decisions,” Carpenter said in an interview with Autonews. “If it weren't for the mortgage business, I don't think GMAC would have needed federal support. ResCap dragged the company down.”

GMAC initially wanted to ask for additional funding from the US Treasury, with rumors hinting that the company needs in between $2.8 and $5.6 billion in loans to help it get out of trouble. After the new CEO was named, GMAC asked the US Department of the Treasury to postpone its decision on the planned follow-on investment until the new management assesses the situation.

GMAC is already operating after it was given a $12.5 billion capital infusion. Carpenter says it is hard to determine how much more money GMAC needs, but the main course of action to be taken in order to stop the losses is to do something with ResCap.

Carpenter replaces Alvaro de Molina and he's expected to bring GMAC back on track. He is also a board member for the financial company, giving him "first-hand knowledge of GMAC and the challenges and opportunities the company faces in its drive to return to sustained profitability," as GMAC said yesterday.