Updated from 12:59 a.m. EDT

GMAC LLC, the lender co-owned by

General Motors

(GM) - Get Report

and investor group

Cerberus Capital

, is seeking to become a bank holding company, a move that would allow it to gain access to a piece of the government's $700 billion financial rescue plan, the

Wall Street Journal

reports.

GMAC has been discussing the move with the

Federal Reserve

for more than a month, the newspaper reports. The plan has taken on added urgency as the two companies have been pursuing a merger of GM and

Chrysler

.

As part of the discussions, Cerberus, which controls automaker Chrysler, has sought to swap most of its Chrysler holdings for a larger share of GMAC, a home and auto lender. Cerberus now controls 51% of GMAC; GM owns the remaining 49%.

It now appears the GM-Chrysler talks are being structured specifically to ensure Cerberus and GM can take advantage of financial bailout programs offered by the

Treasury Department

and the Federal Reserve, the

Journal

reports, citing people familiar with the talks.

As a bank holding company, GMAC could receive equity injections from the Treasury's capital purchase program and have its debt temporarily guaranteed by the Federal Deposit Insurance Corp. GMAC also could gain some flexibility in funding its operations, the

Journal

reports.

Reuters

reports GMAC said it had been approved to use the commercial paper funding facility created earlier this month by Federal Reserve with the aim of easing pressure on the corporate credit market.

GMAC has been pulling back from auto financing in both North America and Europe in recent weeks, citing the difficult credit markets,

Reuters

reports. The company said on Tuesday that it would stop making new consumer car loans in seven European countries.

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This article was written by a staff member of TheStreet.com.