Capital Markets

Seeking TARP Money, GMAC Aims to Be a Bank

That would enable the company to apply for funds under the December 8 deadline for privately held banks.
Stephen TaubNovember 20, 2008

GMAC Financial Services is the latest company applying to become a bank so it can into tap into the U.S. Treasury’s plan for investing money into the preferred stock of banks.

The firm, majority-owned by Cerberus, the private equity firm, announced that it has applied to become a bank holding company in order to receive money under the $700 billion Troubled Asset Relief program, especially TARP’s $250 billion Capital Purchase Program. “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,” GM the company said in a press release.

GMAC also said it expects to have expanded opportunities for funding and for access to capital as a bank holding company. If GMAC’s application to become a bank holding company is accepted, GMAC Bank would become a Utah chartered Federal Reserve member bank, it said.

GMAC joins American Express and CIT Group among non-banks to seeking TARP money. The deadline for privately held banks to apply for Treasury’s plan to buy up bank shares is December 8. Thirty publicly held banks submitted applications to TARP’s $250 billion Capital Purchase Program before the November 14 deadline.