Former GM Finance Division Set To Lose the Feds $1.25 Billion

Ally Financial Inc. (GMA.XX), the government-owned auto lender, said Friday it could lose up to $1.25 billion if its struggling mortgage subsidiary, Residential Capital, files for bankruptcy.

The company’s core auto-lending business, which mainly finances General Motors Co. (GM) and Chrysler Group LLC dealers and customers, posted a pre-tax profit of $611 million, down 10.1% from a year earlier but up 3.2% from the fourth quarter.



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