View Full Version : If at first you dont succeed, try to become a bank...GMAC
11-20-2008, 07:10 AM
GMAC may become a bank holding company
Change would help it secure government money under bailout plan
updated 2:58 p.m. CT, Thurs., Oct. 30, 2008
WASHINGTON - GMAC Financial Services says it's holding discussions with federal regulators about becoming a bank holding company. The move could help it access government funding.
GMAC said in a statement Thursday it plans to refinance its debt and is in discussions with the Treasury Department, the Federal Deposit Insurance Corp. and other federal regulators.
The Treasury Department has outlined plans to use at least $250 billion of the $700 billion bailout of the financial sector to give banks access to capital.
GMAC is the financing arm of General Motors Corp., which owns 49 percent of the company. Cerberus Capital Management LP owns 51 percent of GMAC.
Cerberus is the majority owner of Chrysler LLC, which is in talks with GM about a potential merger.
Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
11-20-2008, 09:07 AM
Good thing the liberals passed this bailout. I am applying for status as a bank holding company myself. Give me the money! Bush is a liberal to the bone. I can't wait for Barry to take over. He promised to fix everything. I can't wait. Free gas, no mortgage payment and world peace, all payed for by the stupid Americans taxpayers. God bless Barry! He has promised to spend the stupid Americans money to bailout these idiots just like Bush. It is the great era of change! I love liberals.
By Erik Holm
Nov. 20 (Bloomberg) -- GMAC LLC (http://www.bloomberg.com/apps/quote?ticker=GM1%3AUS), the largest lender to General Motors Corp. car dealers, has applied for status as a bank holding company so it can get access to the Treasury's $700 billion rescue fund for the financial industry.
The lender also began an exchange offer for $38 billion of debt issued by the company and its Residential Capital home lending unit, Detroit-based GMAC said today in a statement.
Converting to a bank and swapping debt may help GMAC quell doubts about its survival. Losses at GMAC since mid-2007 reached $7.9 billion through last quarter, as home foreclosures pressured the mortgage unit and GM's auto sales plummeted to the worst level since 1945.
``As a bank holding company, GMAC would obtain increased flexibility and stability to fulfill its core mission of providing automotive and mortgage financing to consumers and businesses,'' the statement said.
GMAC has been shut out of some credit markets and last month said it might raise ``significant amounts of capital'' as part of an attempt to become a bank holding company and swap some of its debt. Standard & Poor's said Nov. 7 that GMAC and ResCap were facing a ``dire situation.''
The exchange of cash, preferred shares and new bonds for existing debt will increase GMAC's capital levels as it seeks bank status. GM sold 51 percent of GMAC to a group led by buyout firm Cerberus Capital Management LP in 2006, retaining minority control.
More than 100 lenders, insurers and financial companies have applied to the government for at least $65.8 billion in funds through the Troubled Asset Relief Program, according to data compiled by Bloomberg. Fifty-seven received preliminary approval for $51.5 billion, while 48 more awaited word on requests totaling at least $14.3 billion.
The Treasury's $700 billion rescue plan for the financial industry, announced in October, includes $125 billion allocated to the nine largest U.S. banks and $125 billion originally earmarked for smaller regional lenders.
Some insurers and finance companies are planning to convert to banks to become eligible for the funds. Totals may be higher because disclosures of applications are voluntary, and some smaller institutions are omitted.
GMAC said earlier this month that it sold a reinsurance business to Maiden Holdings Ltd. and agreed to sell two insurance units to the firm as it seeks to avoid a cash squeeze.
To contact the reporter on this story: Erik Holm (http://search.bloomberg.com/search?q=Erik+Holm&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) in New York at email@example.com (firstname.lastname@example.org).
Last Updated: November 20, 2008 08:46 EST
11-20-2008, 09:30 AM
11-20-2008, 09:50 AM
Good thing the liberals passed this bailout.
You've obviously been paying attention.
11-20-2008, 11:29 AM
You've obviously been paying attention.
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