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GMAC hasn’t met conditions to convert to commercial bank status
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GMAC hasn’t met conditions to convert to commercial bank status

December 10, 2008 by · Leave a Comment
Filed under: Industry News 

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The Fed’s actions in the treasury market is really sucking out much of the extra liquidity out of the market as people are using it as a flight to safety in these uncertain times.  It is no surprise that the private markets could not come up with the $30 billion needed to give GMAC the capital they needed to met their obligation under commercial bank status.  

News:

GMAC LLC, the auto and home lender seeking federal aid, hasn’t obtained enough capital to become a bank holding company and may abandon the effort, casting new doubt on the firm’s ability to survive.

A $38 billion debt exchange by GMAC and its Residential Capital LLC mortgage unit to reduce the company’s outstanding debt and raise capital hasn’t attracted enough participation, GMAC said today in a statement. That leaves GMAC short of the $30 billion in regulatory capital demanded by the Federal Reserve for the bank conversion, the lender said.

GMAC, the primary lender to General Motors Corp. dealers, has pinned its recovery on becoming a bank and getting access to federal rescue programs. The company extended the early delivery deadline for debt holders by three days to 5 p.m. on Dec. 12.

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