ResCap Woes Portend Possible Bankruptcies For Lenders

Law360, New York (November 7, 2011, 8:15 PM EST) -- Ally Financial Inc.'s announcement last week that it is curbing its mortgage lending unit could be another sign that firms linked to subprime lending may find their last bastion of relief in bankruptcy court, according to industry experts.

Ally Financial said Wednesday it would seek to scale back its mortgage unit, Residential Capital LLC, to focus on auto lending after stating in a regulatory filing this year that it had doubts about the unit's potential as a going concern. In the same week, a prominent Wall Street analyst wrote that Bank of America Corp., which...
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