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Michael Carpenter, the chief executive of GMAC Financial Services for about a week now, says he expects Charlotte to play "a central part" in the lender's activities as he tries to turn around the embattled firm. But he also cautioned that the Detroit-based company "is not out of the woods yet."
For local bankers, the financial firm is a paradox. Nationally, it's known for its struggles: It has lost more than $5 billion in 2009, and it's operating under heavy government scrutiny after accepting $12.5 billion in federal aid and may need more.
But in Charlotte, it's been a bright spot. As Wachovia and Bank of America laid off workers this year, GMAC added jobs. Since the beginning of the year, GMAC has roughly doubled the number of Charlotte workers, to 500. Most work for the Ally Bank unit or for corporate functions such as audit or compliance.
"I'm not saying it's going to grow at the rate it has grown in recent times," Carpenter said Tuesday, referring to the bank's Charlotte presence. "But it's a central part of the activities of GMAC."
GMAC is not providing estimates for how many Charlotte workers it expects to have in 2010. It has already started moving some of its local employees into a new office uptown, 440 South Church.
Carpenter, 62, took the top spot after the resignation of Al de Molina, but it's not clear why de Molina resigned. Sources told the Observer last week that de Molina had clashed with directors over whether the ResCap mortgage unit should file for bankruptcy. De Molina said he didn't want to be part of a bankruptcy filing and wanted to protect bondholders, the sources said.
Carpenter, a member of the board, said Tuesday that the other board members asked him about a month ago to consider becoming CEO.
De Molina has deep ties to Charlotte, and came to GMAC from Bank of America. Carpenter, asked Tuesday if he had been to Charlotte before, replied, "Almost certainly, but I don't remember the last time I was here."
Carpenter, a U.K. native and resident of Greenwich, Conn., stopped in Charlotte this week as he tours GMAC's major U.S. operations. He spoke to the Observer during a brief interview at GMAC's Ballantyne offices. Questions and answers have been edited for clarity and length.
Q. A lot of GMAC's top managers were recruited by Al de Molina. Do you worry that they'll start leaving? Or have they already started leaving?
I'm sure that people have left, but there isn't anybody that I'm aware of in the top management group. I'm not really worried about that. If we can provide people with exciting career opportunities, and as long as people feel that they're treated fairly, then I don't have any reason to anticipate any unusual degree of turnover.
Q. What's your plan for turning around the company, and how does it differ from de Molina's? He had already set a lot of changes in place. (Among them: converting GMAC into a bank holding company, which gave it access to government funding.)
I think Al's tenure was characterized by just keeping the company alive. He did a great job keeping the company in business. But my mission is all about the future.
Our first objective is to make sure we have a world-class auto finance platform that covers multiple brands and provides both dealers and consumers with competitive financing, but without taking excessive credit risk.
The No. 2 objective is successfully completing the transition from finance company to bank holding company. Bank holding companies are held to higher standards, and there's a major change in the way you run the business day to day.
The third priority is to make sure that we are fully competitive on cost of funds and also cost of operations. That is one of the reasons Ally Bank is so important, because deposits are relatively less expensive funding than other alternatives.
And the fourth priority is, the company has been weighed down by a (residential mortgage) subsidiary called ResCap, which has lost many billions of dollars. If it were not for that business, then we would not, in my judgment, have needed governmental support. So we need to restructure ResCap so it isn't a burden.
Q. Does that mean filing for bankruptcy for ResCap?
Not necessarily. What I've said is, we are exploring every conceivable alternative.
Q. Why did you take this job? It's going to open you up to a lot of criticism.
There are obvious reasons why taking on something like this gives one pause. However, I actually went on the boards of both CIT and GMAC about six months ago, and I did it for a very simple reason. I don't mean this to sound arrogant, but my experience in financial services and in restructuring companies is pretty deep, and I felt it was important to be part of the solution to one of this country's most difficult problems. My being CEO of GMAC was not something that was even in my mind a month ago, but when the board asked me to do it, I felt I really had to.
Q. What's your response to people who are going to say that you have blemishes on your record?
I am extremely proud of my record. I've taken several organizations from losses to high levels of profitability. I've dealt in a very ethical and above-board way in every business I've ever run. Almost every business that I've gotten involved in has been a difficult situation for various reasons. There have been once or twice in a 35-year career when things have happened that have been environmental in nature and I had to deal with them.
Q. Tell me about when you got word that you'd be the new CEO.
Well, as you know, I was on the board of directors, and at one of the board meetings I was asked by the other members: Would I consider taking on this role? I said, Well, let me at least think about it. So I did. It's not very much more complicated or glamorous than that.
Q. That was within the past month?
It might have been six weeks. I couldn't pin it down, but very recently.
Q. I guess Al was not at that meeting? It was just the independent directors?
That's correct.
