Billionaire Warren Buffett sought to buy Residential Capital from Ally Financial Inc. before the government-owned company put the home lender in bankruptcy, Bloomberg News reported today. Buffett’s Berkshire Hathaway Inc. would have paid almost nothing upfront for the assets, while taking on potential liabilities such as mounting litigation costs and other claims. Buffett sought to avoid a ResCap bankruptcy filing because Berkshire had unsecured debt in the mortgage unit. Detroit-based Ally turned down the proposal after deciding that a bankruptcy filing and sale better protected the company from future liabilities. ResCap's board voted to declare bankruptcy and arrange a sale to Fortress Investment Group LLC and Nationstar Mortgage Holdings Inc. for about $2.3 billion, ResCap Chairman and CEO Thomas Marano said this week. Fortress and Nationstar will not take on the liabilities that Berkshire had proposed assuming.
