This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

GMAC Faces Major Hurdles In Bank Application

Updated from 8:56 a.m. EST

GMAC Financial Services faces major regulatory obstacles in its quest to become a bank holding company, since its owners, Cerberus Capital Management and General Motors (GM - Get Report) are not banks themselves.

General Motors' financing arm announced on Thursday morning its application to become a bank holding company, which would make it to be eligible for aid under the government's $700 billion bank rescue plan.

However, federal banking laws strictly limit the amount of influence bank shareholders are allowed to have if they are not themselves registered as bank holding companies. For example, they are not allowed to own more than 25% of a bank and there are limits to the amount of board representation they may have.

Cerberus owns 51% of GMAC and General Motors owns 49%. One executive involved in discussions with GMAC and its owners expects GM to dilute its stake via a debt for equity swap with GMAC creditors, details of which were announced Thursday. A GMAC spokeswoman referred questions to GM and Cerberus, both of which declined to comment.

Another person involved in the GMAC bank talks says Cerberus believes it can preserve its existing ownership structure, where the private equity firm's stake is split up into different pieces, held by investors in Cerberus, Cerberus leader Stephen Feinberg, and other legal entities that are affiliated with Cerberus. That remains an open question, but the fact that GMAC actually applied for bank status after several weeks of discussions with regulators would appear to suggest its owners are optimistic they will get approved.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
GM $30.96 1.38%
AAPL $92.69 -0.59%
FB $119.49 1.43%
GOOG $711.11 1.40%
TSLA $214.93 1.61%


Chart of I:DJI
DOW 17,740.63 +79.92 0.45%
S&P 500 2,057.14 +6.51 0.32%
NASDAQ 4,736.1550 +19.0610 0.40%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs