GMAC, General Motors' financing arm, on Wednesday said there was substantial doubt as to whether Residential Capital, its mortgage finance unit, would survive without outside support.
GMAC's net loss widened from $1.6bn a year ago to $2.5bn, which it attributed to a $1.9bn loss at ResCap, lower used-vehicle prices and deteriorating creditworthiness among carbuyers and dealers.
GMAC's chief financial officer Robert Hull said that "this is the most difficult environment we have ever faced". GMAC is 51 per cent owned by Cerberus Capital Management, the buy-out group that also owns Chrysler, and 49 per cent by GM.
GMAC, which has applied to become a bank holding company so that it can access federal bail-out funds, said it was hoping to tap the US governmentâ??s troubled asset relief programme.
The company is already participating in the Federal Reserveâ??s commercial paper programme for cash-strapped companies and on Wednesday said that within it, it had executed more than $5bn of trades in the past two weeks.
