S&P: GMAC on watch

Standard & Poor's said it placed its ratings on GMAC LLC, including its BB+/B-1 counterparty credit rating, on CreditWatch with negative implications.

The CreditWatch action follows the announcement of its 100% owned subsidiary, Residential Capital LLC (BBB-/Watch negative/A-3), of a significant downsizing of its operations, the agency said, noting that the plan includes an employee reduction of 3,000 or 25% of the total headcount.

Additionally, the cost of the reduction, which will be reflected as a fourth-quarter 2007 charge on Residential Capital's books, will be $100 million, the agency said, noting that Residential Capital has historically been a significant contributor to GMAC's operating performance.

However, recent market conditions have increasingly pressured operations at Residential Capital, which has reported sizable losses in each of the previous three quarters, S&P added.

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