GMAC Submits Application to Become Bank Holding Company
NEW YORK — GMAC Financial Services announced early this morning that it has submitted an application to the U.S. Federal Reserve Board of Governors for approval to become a bank holding company under the Bank Holding Company Act of 1956, as amended.
GMAC also announced today that it has submitted an application to the U.S. Treasury to participate in the Capital Purchase Program created under the Emergency Economic Stabilization Act of 2008, conditional upon becoming a bank holding company.
As a bank holding company, officials said GMAC would obtain increased flexibility and stability to fulfill its core mission of providing auto and mortgage financing to consumers and businesses.
Executives also expect the financial institution 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 under the BHC Act is accepted, GMAC Bank will become a Utah chartered Federal Reserve member bank.
The company also announced that it has commenced separate private exchange offers and cash tender offers to purchase and/or exchange certain of its and its subsidiaries' outstanding notes held by eligible holders for cash, newly issued notes of GMAC and, in the case of the GMAC offers only, preferred stock of a wholly owned GMAC subsidiary, upon the terms and subject to the conditions in the applicable confidential offering memoranda, each dated Nov. 20, 2008 and the related letters of transmittal.
"The purpose of the offers is to increase GMAC's capital levels while reducing the amount of GMAC's and ResCap's outstanding debt in connection with GMAC's capital plan relating to its application to become a bank holding company," officials explained.
GMAC indicated that it cannot assure that it will obtain Federal Reserve approval to become a bank holding company or that any of the transactions described will be completed, and if completed, whether they will achieve a sufficient amount of capital to satisfy the applicable capital adequacy requirements or will otherwise be successful.