By Meena Thiruvengadam Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- The U.S. Federal Reserve on Wednesday approved GMAC Financial Services' application to become a bank holding company, a status that would give the auto-financing arm of General Motors Corp. (GM) access to government bailout dollars and the Fed's discount window.
The move complements a $17.4 billion emergency loan package the government extended to GM and Chrysler last week to help them cope with plunging sales amid the credit crisis.
Giving GMAC bank holding company status strengthens "GMAC's ability to fund the purchases of vehicles manufactured by GM and other companies and by helping to normalize the credit markets for such purchases," the Fed said Wednesday.
As part of the approval, the Fed is requiring GM and Cerberus Capital Management LP to reduce their ownership stakes in Detroit-based GMAC. GM must reduce its ownership interest in GMAC to less than 10% in voting shares and total equity. Cerberus, which owns Chrysler, must reduce its interest to a maximum of 14.9% in voting shares and 33% in total equity. Additionally, an industrial loan company controlled by GMAC would need to become a commercial bank. That industrial loan company, Utah-based GMAC Bank has consolidated assets of $33 billion and deposits of $17 billion, the Fed said.
"GMAC will be well-capitalized on completion of the proposal," the Fed said.
GMAC is one of the nation's largest auto financing companies and has consolidated assets of approximately $211.3 billion. It is one of several companies, including American Express Co. (AXP), CIT Group Inc. (CIT) and Discover Financial Services (DFS), that have applied to become bank holding companies after the government announced a $700 billion financial industry rescue package.
-By Meena Thiruvengadam, Dow Jones Newswires; 202-862-6629; meena.thiruvengadam@dowjones.com
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Publié le 24 Décembre 2008 Copyright © 2008 Dowjones