GMAC Inc. said Tuesday that it is in discussions with the Federal Reserve Board related to the $5.6 billion the lender must raise in new capital by Nov. 9.
GMAC, of Detroit, must raise the capital to satisfy a recommendation of the government-conducted stress tests this spring. The lender could raise the money through a mix of methods, including issuing equity, converting other capital securities into common equity, divesting businesses or asking for additional federal help.
The $5.6 billion is "still a subject of discussion" between the company and the Fed, said Robert Hull, GMAC's chief financial officer, during a conference call Tuesday on the company's second-quarter results. Hull said GMAC does not "have a clear answer or one we could disclose."
Hull also said the company would like to issue the rest of the government-backed debt allowed under a program administered by the Federal Deposit Insurance Corp. that is slated to expire by the end of October.
GMAC said in June that it will need written approval from the FDIC before it issues any more cheaply priced debt insured by the regulator.
At the time, the agency said it had required GMAC to diversify the overall funding of Ally Bank, the rebranded GMAC Bank unit, and to focus on reducing its deposit costs.
The lender got the go-ahead to issue as much as $7.4 billion of debt guaranteed by the FDIC in May. Under this arrangement, GMAC sold $4.5 billion of bonds June 3.
The ability to sell this type of debt was a central plank in the strapped lender's conversion to a bank holding company in December.
Hull said that "no options are off the table" for the ailing mortgage unit, Residential Capital LLC, which reported a second-quarter loss of $1.8 billion.
GMAC is not ready to pull the rug from under ResCap, he said, given the lender's "core strengths" of originating and servicing mortgages. "As long as we see the functionality of the business, we'll stay in it," he added.
Also Tuesday, GMAC reported a second-quarter loss of $3.9 billion, compared to a year-earlier loss of $2.48 billion. The second-quarter loss was driven primarily by a charge related to the lender's incorporation and continued red ink stemming from souring mortgage loans.
