GMAC Applies For Bank-Holding Status

DOW JONES NEWSWIRES

GMAC Financial Services confirmed it has applied to become a bank as it seeks money from the Treasury Department’s $700 billion injection effort and other avenues of cheaper capital in an effort to stabilize its teetering state.

The cash-strapped financier, 49%-owned by General Motors Corp. (GM), also announced offers to exchange $38 billion in notes from GMAC and its Residential Capital home-lending business for new securities with the same maturity dates and interest rates. The move would cost GMAC up to $2.5 billion in cash, it said.

As a bank-holding company, GMAC said it would obtain “increased flexibility and stability to fulfill its core mission of providing automotive and mortgage financing to consumers and businesses.” New avenues of potential funding include the Fed’s discount window, where banks can get inexpensive, short-term emergency loans.

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I guess it’s true – there’s more than one way to skin a cat fleece the sheep.

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