Moody's Investors Service Inc. said it believes that General Motors Corp. and Cerberus Capital Management are preparing to pull the plug on ailing home lender Residential Capital of Bloomington.
In a review of ResCap's credit ratings, Moody's said that it "has come to believe that ResCap will no longer receive direct, permanent equity support from its parents."
ResCap is a unit of financing company GMAC, which in turn is owned by GM and Cerberus.
The two companies have already made equity infusions of more than $3 billion to prop up the GMAC unit, which has been bludgeoned by the U.S. housing crisis and concurrent credit crunch.
The ratings agency said that the company already is in a very weak position, with "tenuous liquidity" that is likely to worsen after the company exchanges $12.8 billion in bonds.
ResCap recorded its sixth consecutive quarterly loss in the first quarter, reporting that it was $859 million in the red. Moody's said the company is "likely to incur additional losses over the coming quarters," and is unsure whether ResCap can return to profitability.
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