Home loan firm ResCap seeks capital

Residential Capital, the mortgage-finance company owned by GMAC, said Monday that it might not be able to meet debt obligations unless it finds an additional $600 million by the end of June.

ResCap, the eighth-largest home loan firm, on Monday began offering as little as 80 cents on the dollar to exchange or buy back $14 billion of bonds to extend maturities and stave off bankruptcy.

To finance the debt restructuring, the Minneapolis lender is seeking a new $3.5-billion credit line from its parent GMAC, which is owned by General Motors Corp. and an investor group led by Cerberus Capital Management.

"There is a significant risk that we will not be able to meet our debt service obligations, be unable to meet certain financial covenants in our credit facilities and be in a negative liquidity position in June 2008," ResCap said in a filing with the Securities and Exchange Commission.

Record U.S. home foreclosures have led to six straight quarterly losses totaling $5.3 billion, eroding ResCap's cash position and pushing it closer to violating loan agreements.

ResCap said it was trying to amend the credit terms.

ResCap also wants GMAC to contribute $350 million of ResCap notes outstanding to the mortgage lender by the end of May and lend it $150 million more under an existing credit facility.

Even if all those actions are successful, ResCap said it would need to sell certain assets or raise capital in other ways to get the additional $600 million by the end of June.



Paul Atkins to leave SEC

Securities and Exchange Commission member Paul Atkins, a Republican who resisted the agency's crackdown on corporations after mutual-fund trading scandals and the collapse of Enron Corp., is stepping down.

Atkins, 50, plans to stay until a successor takes office, the SEC said Monday. His term, which began in 2002, ends in June.

President Bush may nominate law professor Troy A. Paredes for the post, said three people briefed on the matter who declined to be identified because the White House hasn't announced the choice.

White House spokeswoman Emily Lawrimore declined to comment. Paredes, 37, who teaches at Washington University in St. Louis, didn't return phone calls.

Atkins, a former lawyer for accounting giant PricewaterhouseCoopers, opposed rules for hedge funds and mutual fund boards and criticized record fines the agency imposed after the failure of Enron, arguing that they penalized shareholders.

Under SEC Chairman Christopher Cox, the sanctions fell last year to the lowest level since 2002.



Morgan Stanley to cut more jobs

Morgan Stanley, the second-biggest U.S. securities firm, plans to reduce head count as much as 5% in the next few months after wrong-way bets on sub-prime mortgages saddled the bank with a $3.6-billion fourth-quarter loss.

Mark Lake, a spokesman for the New York company, confirmed the job cuts, which will come mainly in the U.S. and won't affect the firm's retail business.

Morgan Stanley, which employs about 47,000 people, already has shed at least 3,000 jobs since October.

The world's biggest banks and securities firms have cut at least 50,000 jobs in the last year after write-downs and credit losses from the collapse of the sub-prime mortgage market totaling more than $300 billion.

About 100,000 jobs may vanish by the time the current round of cuts runs its course, said analyst Jo Bennett at executive search firm Battalia Winston International.

Morgan Stanley's fourth-quarter loss was its first as a publicly traded company. It had to raise $5 billion in capital by selling convertible securities to China Investment Corp., the state-owned investment fund.

Morgan Stanley shares fell $1.59, or 3.2%, to $48.72. They dropped 21% last year and are down 8.3% this year.

From Times Wire Services