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The financial crisis currently felt all over the world, it is not only the average American that has been feeling the crunch.  Many business organizations, particularly those in the financial industries have been also feeling the effects of the current global financial crisis.  This is despite the fact that there has been a rise on the number of Americans now looking for means and ways to be able to cope financially with its effects.

Such was the case with the General Motors Acceptance Corporation, also known as GMAC.  Once a division under the General Motors Company, GMAC was founded back in 1919 in Detroit, Michigan and is currently now a separate business entity altogether.  Today, it is one of the most established financial services firm in the United States with branches in almost 40 countries around the world.  It offers a number of different types of financial services.  Some of these include insurance policies, mortgages through Residential Capital LLC, automotive financing and bonds.

Recently, it has been determined that value of GMAC's bonds has been tipping steadily.  This steady decline in the value of the bonds offered by GMAC has been attributed to the massive losses incurred by Residential Capital, LLC, which is the division handling the mortgage services provided by GMAC to its worldwide clients, specifically the investment securities products and services the subsidiary offers.  Residential Capital, LLC has been reported to have incurred $859 million in loses.  Changes in the mortgage loan values received by Residential Capital, LLC have also been found to have played a role in the further decline in the value of the bonds of GMAC.  In response to this decline, Moore's Investors Services have reduced the credit rating of GMAC in May 2008 from a B2 financial institution to just a B3 financial institution.  According to Moore's Investors Services, the decision to lower the credit rating of GMAC was due to inability of the company in providing sufficient proof that it is still able to acquire enough funds in order to cover the current debt that it has incurred.  On top of that, Moore's Investors Services have also determined that Residental Capital, LLC has been a part of many transactions with regards to home mortgages and loans which the financial firm classified as risky.

In order to rectify the situation, Residential Capital, LLC has been taking a number of precautionary measures in order to uplift its credit rating as well as the credit rating of Residential Capital, LLC altogether.  One such measure is through undertaking a refinancing program valued at about $60 billion.  The refinancing program included the creation of new credit lines as well as the conversion of some of the debt that they have incurred into bonds offered by Residential Capital, LLC.

Another measure undertaken by Residential Capital, LLC is the opening of the company for new investors in order to acquire the much needed capital it needs to be able to regain its financial footing.  Majority of the newly acquired secured and unsecured bonds, which have been valued at $1.7 billion and $1.8 billion respectively, are all expected to mature in the year 2010 with high return rates.

Unfortunately, this decision of Residential Capital, LLC had proven to have caused more damage to the overall credit rating of GMAC and Residential Capital, LLC.  This is because the refinancing and restructure efforts of the company had actually increased its operating expenses, lowering the ability of the company to earn a profit.

In an effort to help Residential Capital, LLC, GMAC had also undergone an intensive restructuring as part of its precautionary measures.  However, this did not help either.  By the end of March, the equity of Residential Capital, LLC had declined to $5.8 billion.  This had also caused the cash flow into Residential Capital, LLC reduced by about $4 billion.

At the rate that GMAC and Residential Capital, LLC is going in the past few months, many financial analysts as well as the company's shareholders and investors are beginning to show great concern on how long the company would remain afloat.

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