GMAC Cleared to Become Bank

The future of Chrysler Financial, Chrysler's financing arm, is also uncertain. Earlier this month, Chrysler Financial, which provides financing for 75% of Chrysler dealers, said it could be forced to temporarily suspend funding for dealer vehicle inventories if dealers keep pulling large amounts of their money out of an account used to fund those loans.

The Fed's decision was announced after the close of a shortened trading day on Wall Street. GM shares closed up more than 8% earlier Wednesday.

The Fed said the plan will "benefit the public by strengthening GMAC's ability to fund the purchases of vehicles manufactured by GM and other companies and by helping to normalize the credit markets for such purchases."

In a statement, GMAC praised the Fed's action.

"This is a very significant positive step for the company, and it marks a key turning point in our 89-year history," said spokeswoman Gina Proia. "GMAC believes becoming a bank holding company is the best long-term solution to provide automotive and mortgage financing to consumers and business, including auto dealers."

She said the change in status would provide the company with "improved access to funding."