Surprise, surprise. The struggling financing arm of General Motors, GMAC Financial Services, has filed for bank holding status in a bid to get its hands on some of the $700 billion bailout cash.
The move comes after attempts by Ford, GM, and Chrysler to receive a $25 billion auto bailout seemed to fall on deaf ears.
The company, which offers both auto and mortgage financing, said the move would allow it to continue making such loans to consumers.
In early November, GMAC reported a third quarter loss of $2.5 billion, driven largely by its real estate finance unit Residential Capital (ResCap).
ResCap accounted for $1.9 billion in losses thanks to higher credit-related provisions, soft revenue, and flagging loan origination volume.
At the time, GMAC warned ResCap’s future was uncertain, this after shuttering its wholesale mortgage channel Homecomings Financial and closing all GMAC Mortgage retail branches throughout the country.
The company is also commencing a private exchange offer and cash tender offer for $38 billion in GMAC and ResCap debt to boost capital.
If their application is approved, GMAC Bank will become a Utah chartered Federal Reserve member bank.
Look for Ford and Chrysler to follow suit with their respective financing companies.
Shares of GM were up 30 cents, or 10.75%, to $3.09 in midday trading on Wall Street.