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Ally Suffers Q2 Losses After ResCap Bankruptcy

Shaken up by the bankruptcy of ""Residential Capital"":https://www.rescapholdings.com/ (ResCap), ""Ally Financial Inc. (Ally) reported"":http://www.ally.com/about/investor/events-presentations/ a net loss of $898 million for the second quarter of 2012.

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Ally stated its second quarter results were adversely affected by a $1.2 billion charge resulting from Rescap's Chapter 11 bankrupty protection, which was announced May 14.

ResCap, the bank's mortgage arm, suffered major losses after taking risks in the subprime market.

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""The second quarter of 2012 marked a seminal moment for Ally. Strategic actions were announced in May that aim to permanently address the legacy mortgage risks and put Ally on an accelerated path to repay the remaining U.S. Treasury investment,"" said Ally CEO Michael A. Carpenter. ""The ResCap Chapter 11 case continues to move forward, and plans to pursue alternatives for Ally's international operations are underway.""

In the first quarter of this year, Ally reported a net income of $310 million and a net income of $113 million for the second quarter of 2011.

The company also reported a core pre-tax loss of $753 million for the second quarter of 2012, compared to $474 million in the prior quarter and $465 million in the second quarter of 2011.

Ally's auto-centric businesses posted a profit of $746 million compared to $611 million in the first quarter of 2012 and $700 million in the second quarter a year ago.

Excluding ResCap, its mortgage operations increased its profits to $110 million from $55 million in the first quarter of 2012.

About Author: Esther Cho

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