GMAC Seeks Government Investment

(MoneyWatch)  GMAC Financial Services is in discussions with federal regulators, seeking official status as a bank holding company. That could make GMAC eligible for the federal government to buy shares in the company, as part of the financial-industries bailout.

GMAC owns a so-called "industrial loan corporation" chartered in Utah, which functions much like a bank.

GMAC is probably already eligible for the asset-purchase part of the federal bailout, called TARP, for Troubled Assets Relief Program, but so far only bank holding companies have been approved for the capital-purchase aspect of the program.

Besides auto loans, GMAC has a huge mortgage lending subsidiary, ResCap, which was heavily invested in subprime mortgages that went bad.

The U.S. Treasury Department lists institutions that have been approved for the capital-purchase program on its web site, along with the size of the government investment. For instance, Treasury has already invested $15 billion in preferred shares and warrants for Bank of America.

GMAC confirmed on Oct. 30 that it was "in discussions with federal regulators on bank status." The company said it will also seek additional private funding.

In a written statement, GMAC CEO Alvaro G. de Molina said, "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."