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GMAC Applies to be Bank Holding Company

Published 11/20/08 Dustin Ensinger - Print Article
E-mail - editor@economyincisis.org

The financing arm of General Motors, GMAC, has applied to become a bank holding company in an effort to become eligible to receive a portion of the $700 billion government bailout.

Other companies have made similar moves to become eligible for government funds. American Express, Goldman Sachs, Morgan Stanley and CIT Group were all recently converted to bank holding companies.

The Treasury has already invested $158.5 billion in 23 banks as part of the Troubled Asset Relief Program.

If GMAC were allowed to receive funds as part of TARP, it would shore up the company’s capital deficiencies and allow it to provide credit to potential buyers which could also provide a much needed boost to GM.

GMAC is another victim of the mortgage mess. By involving itself in the housing market, it suffered catastrophic losses when the bubble burst on the housing market. Overall, GMAC has lost $7.9 billion over the past five quarters.

Source The New York Times:

GMAC Financial Services, the financing arm of General Motors, said Thursday that it had applied to the Federal Reserve to become a bank holding company, which would allow it to become eligible for aid under the Treasury’s $700 billion bank rescue plan.

The company said the change in status would shore up its capital position and allow it to continue providing automotive and mortgage financing.

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