Epic: Ally Bank (GMAC) Torn A New Asshole

Thomas Marano, chief executive officer of Residential Capital, wrote me a letter.

“Dear Homeowner,” it begins. (That’s me, homeowner.)

“As you may have read or heard, Residential Capital LLC recently announced that it and its subsidiaries, including GMAC Mortgage, are restructuring under Chapter 11. The restructuring does not change your obligations as a mortgage borrower. You must continue to make your scheduled mortgage payments on time and in full.”

I can only guess why he sent me this letter. Maybe he’s afraid I’m going to do what he’s doing.

ResCap is a subsidiary of Ally Financial, which was founded in Detroit as General Motors Acceptance Corp., or GMAC, in 1919. It nearly collapsed in the 2008 financial crisis after it had made a bold expansion into “liar loans” and other subprime mortgage products.

Additionally, the U.S. auto industry it serviced was near death.

To keep GMAC alive, the Federal Reserve allowed it to become a bank holding company — giving it the ability to borrow from the Fed at nearly 0%. The U.S. government, beginning with the Bush administration, also gave it a $17.2 billion bailout, of which it still owes nearly $12 billion.

Read more here.