GMAC LLC has received federal approval to become a bank holding company — potentially increasing access to capital for its mortgage lending subsidiary.
GMAC originally submitted an application last month to the Federal Reserve Board of Governors to become a bank holding company under the Bank Holding Company Act of 1956.
A Christmas Eve filing with the Securities and Exchange Commission indicated the application was approved.
“As a bank holding company, GMAC will have expanded opportunities for funding and access to capital, which will provide increased flexibility and stability,” an announcement from the New York-based company stated.
The company also said the Utah Department of Financial Institutions approved the conversion of GMAC Bank to a state bank. That unit, established in 2001, operates online.
GMAC said separate private debt exchange offers and cash tender offers that were subject to the approval of the bank holding company application are ongoing and expire tonight at 11:59 p.m. EST.
While Wednesday’s statement did not address the ongoing viability of subsidiary Residential Capital LLC — which GMAC previously warned might fail without its further economic support — the increased access to capital likely bodes well for ResCap’s survival.
GMAC Chief Executive Officer Alvaro G. de Molina called the fed’s approval a key turning point in the company’s history and noted the proposed structure competitively positions GMAC as a lender.
Related:
GMAC Submits Bank Application to Fed
Depositors and taxpayers could fund home loans and car loans if GMAC Financial Services’ application to become a bank-holding company is approved. The move has the potential to positively impact the mortgage industry more than any other action under the Troubled Asset Relief Program.
