Rob Haines, an analyst at bond research firm CreditSights, says a government investment in the life insurance sector makes sense because life insurers buy lots of corporate bonds. If insurers are healthy, they can in turn supply credit to other industries.
The GMAC approval also bodes well for other financial companies whose status as banks is less than obvious. Among these is Discover Financial Services (DFS - Get Report). The lender has received preliminary approval to become a bank holding company, but has not received any federal funds so far.
Rival American Express (AXP - Get Report) in November made the switch to bank holding company status and received approval for $3.4 billion in TARP funds last week. Investment banks Goldman Sachs (GS - Get Report) and Morgan Stanley (MS - Get Report), who were among the initial recipients of TARP investments, were granted bank holding company status in September.
Discover spokesman Jon Drummond says the credit card company estimates it is eligible for $400 million to $1.2 billion.