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GMAC confirms talks to become bank holding company

GMAC confirms talks to become bank holding company

GMAC Financial Services confirmed Thursday that it was holding discussions with federal regulators about becoming a bank holding company, a move that could help it access government funding and be part of a potential acquisition of Chrysler LLC by General Motors Corp.
GMAC said it planned to refinance its debt and was in discussions with the Treasury Department, the Federal Deposit Insurance Corp. and other federal regulators about changing its status.
Under the designation, "GMAC would obtain increased flexibility and stability to fulfill its core mission of providing automotive and mortgage financing to consumers and businesses," the company said in a statement. "GMAC also expects to have expanded opportunities for funding and for access to capital as a bank holding company."
Cerberus Capital Management LP owns 51 percent of GMAC, and General Motors owns the rest. Cerberus also is the majority owner of Chrysler, which has been in talks with GM about a possible merger aimed at helping the automakers survive the downturn in the auto industry.
Cerberus has discussed receiving GM's stake in GMAC in exchange for Chrysler and an equity stake in GM, according to a person briefed on the negotiations who spoke on condition of anonymity because the talks are secret. GM sold the 51 percent stake in GMAC to Cerberus in 2006.
GM would need to divest itself of at least half of its ownership stake in GMAC for the lender to eligible to become a bank holding company because federal law limits companies with commercial interests from having control over a banking organization.
The Treasury Department has outlined plans to use at least $250 billion of the government's $700 billion financial bailout to give banks access to capital in exchange for partial ownership.
Investment banks Goldman Sachs and Morgan Stanley were approved in September to become bank holding companies, which carries additional regulatory scrutiny but gives them access to borrowing from the Fed.
Many companies have faced problems accessing credit, and many lenders, including GMAC, have tightened credit standards for car loans. That helped push U.S. auto sales to a 15-year low last month.
GM has been lobbying the Bush administration and some members of Congress for at least $10 billion in aid to help the company maintain its operations and possibly facilitate a deal with Chrysler.
GMAC said it would release details about its debt refinancing soon. GMAC CEO Alvaro G. de Molina said in a statement that the "benefits of this type of restructuring would allow us to put additional capital and liquidity resources immediately to work in financing consumers and automotive dealers."
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AP Auto Writer Tom Krisher in Detroit contributed to this report.


Updated : 2021-10-24 06:53 GMT+08:00