GENERAL MOTORS'S GMAC FILES TO BECOME A BANK!

[link to www.usatoday.com]



DENVER — GMAC Financial Services has applied to become a bank holding company, which would allow General Motors' financing arm to be eligible for aid under the government's $700 billion bank rescue plan.

GMAC said Thursday that the change in status would shore up its capital position and allow it to continue providing auto and mortgage financing.

GMAC is majority owned by the private equity firm Cerberus, which also owns most of Chrysler. General Motors, which itself is running out of cash, owns a 49% stake in GMAC.

GMAC also is launching cash tender offers to buy or swap debt held by its units and mortgage business Residential Capital. It is offering to swap the debt for cash, new notes or preferred stock, in a move to boost capital and reduce debt.

The financing arms of Ford and Chrysler may also apply to become bank holding companies, and therefore become eligible for a piece of the financial bailout being administered by the Treasury Department.
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Earlier this month, GMAC reported its third-quarter loss widened to $2.52 billion compared with a loss of $1.6 billion a year ago. Steep losses at the company's insurance division weighed heavily on the results.

GMAC also warned that its mortgage lending division, ResCap, could fail. In September, GMAC announced it would close its 200 retail offices and lay off about 5,000 employees, with the bulk of cuts coming at ResCap. The division lost $1.91 billion in the third quarter.

GMAC has tightened its criteria for U.S. consumers seeking financing, including limiting purchases to those with a credit score of 700 or above and limiting how much financing new car buyers can receive.