Troubled lender GMAC Financial Services (GJM), the former lending arm of General Motors Corp. (MTLQQ.PK), announced Monday that its Chief Executive Officer Alvaro de Molina has resigned from the company. GMAC has named Ex-Citigroup Executive Michael Carpenter to succeed Molina, effective immediately. Carpenter, with extensive financial services experience, was already serving on the board of GMAC since May 2009. Molina served a chief executive officer for the last 19 months, since April 2008.
Following the $12.5 billion bail-out given by the U.S. government as part of Troubled Asset Relief Program or TARP, the treasury department toughened scrutiny of Detroit, Michigan-based GMAC, and filled two of the seven board seats, one of them being Carpenter. The third capital infusion that was on the way has been postponed by the treasury department on advice from the company, until the management along with Carpenter have assessed the current financial so as advise on the appropriate amount and form of such funding. The U.S. government currently holds a 35.4% stake in the company since the two capital infusions.
In a statement, GMAC chairman, Franklin Hobbs said, "Mike Carpenter is a world-class CEO, and the board has great confidence that he is the right leader for GMAC at this pivotal moment. GMAC will benefit from Mike's broad and deep experience in banking, capital markets, turnarounds and corporate strategy. In addition, as a GMAC board member, he has first-hand knowledge of GMAC and the challenges and opportunities the company faces in its drive to return to sustained profitability and to repay taxpayers."
In his new role, Carpenter will be responsible for accelerating the strategic and operational changes necessary to focus GMAC on its core auto finance and related businesses, while positioning the company for long-term growth.
Carpenter noted that his mission would be to operate GMAC at the rigorous standards required of a bank holding company, and to repay in full the funds the U.S. government has invested in GMAC. Carpenter added that a renewed GMAC is crucial to bolster the ailing U.S. auto industry. Carpenter has resigned from the board of CIT Group in order to devote his full attention to his new role at GMAC.
Carpenter stated, "I am honored by the opportunity to lead GMAC at this critical juncture, pledging to work with a sense of urgency to make GMAC the premier provider of auto finance and related services for both dealers and consumers across the country."
Most recently, Carpenter founded Southgate Alternative Investments in 2007. From 2002 to 2006, he served as chairman and chief executive officer of Citigroup Alternative Investments, overseeing $60 billion of proprietary capital and customer funds globally in various alternative investment vehicles.
From 1998 to 2002, Carpenter was chairman and chief executive officer of Citigroup's Global Corporate & Investment Bank, with responsibility for Salomon Smith Barney Inc. and Citibank's corporate banking activities globally. Carpenter was named chairman and chief executive officer of Salomon Smith Barney in 1998, shortly after the merger that created Citigroup and led the first ever successful integration of a commercial and investment bank.
Prior to Citigroup, Carpenter serves as chairman and chief executive officer of Travelers Life & Annuity and vice chairman of Travelers Group Inc., responsible for strategy and business development. He was also chairman of the board, president and chief executive officer of Kidder Peabody Group Inc., a wholly owned subsidiary of General Electric Company, from 1989 to 1994.
Earlier in his career, Carpenter spent nine years as vice president and director of the Boston Consulting Group consulting to major companies on corporate strategy and three years with Imperial Chemical Industries of the U.K.
The company also expressed its deep appreciation for Molina's stewardship since April 2008, a period of unprecedented turmoil for the company and the financial services industry. GMAC said that Molina helped steer GMAC through an extraordinarily challenging period, and was instrumental in the conversion of GMAC into a bank holding company, the recruitment of talented managers, and the establishment of Ally Bank.
Before joining GMAC in September 2007 as chief operating officer, Molina spent 17 years at Bank of America, most recently serving as chief financial officer. During his tenure at Bank of America, he also served as chief executive officer of Banc of America Securities, president of global corporate and investment banking, and corporate treasurer. Prior to joining Bank of America, Molina served in the lead financial role for emerging markets at J.P. Morgan. He began his career in 1979 with PriceWaterhouse.
"I came to GMAC thinking that it was a short-term assignment working through a liquidity crisis. That crisis lasted two years. With the help of government support and the incredible efforts of our team, we are now on stable footing, positioned for profitability in 2010 and beyond. It is a good time for me to move on to my next chapter. I wish the GMAC board and team great success," Molina said.
GJM closed Monday's regular trading session at $18.15, up $0.10 or 0.55% on a volume of 23,810 shares, higher than the three-month average volume of 12,280 shares.
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