The Industry's Leading Source For F&I, Sales And Technology

Special Finance®

GMAC Falling Short in Bid to Convert to Bank Status

December 10, 2008

NEW YORK — Captive lender GMAC LLC has released a statement announcing that it will likely fall short in its attempt to raise enough capital to convert to a bank holding company, leaving the firm's future uncertain.

Last month, GMAC announced that it would apply to convert to bank status with the stated goal of tapping into the $700 billion in funds made available by the Troubled Asset Relief Program. The Federal Reserve told the lender that it must raise $30 billion in regulatory capital, among other conditions, or its application would be denied.

GMAC and its Residential Capital LLC (ResCap) mortgage unit offered investors holding $38 billion worth of its notes a trade for new notes and preferred stock, which would have counted toward the $30 billion goal. The deadline on the offer has been extended to 5 p.m. Friday, but the debt exchange has raised only about $8.3 billion so far.

"If the requisite participation in the offers has not been received, GMAC management intends to withdraw its application to become a bank holding company," the firm's announcement stated. "If GMAC is unable to successfully convert to a bank holding company and complete the GMAC and ResCap offers by December 31, 2008, it would have a near-term material adverse effect on GMAC's business, results of operations, and financial position."

Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email:  



New York Attorney General Alleges Fraud, Coverup in Rental Unit Sales

Attorney General Andrew M. Cuomo's office has filed suit against Poughkeepsie Chevrolet and its former owner, Raymond Wilkinson III, for failing to inform customers that the cars they purchased were previously used as rental vehicles, then altering documents to cover up the fraud.