GMAC Seeks Bank Holding Company Status

GMAC Financial Services, General Motors’ financial arm, is in discussions with federal regulatory authorities seeking bank holding company status under the Bank Holding Company Act of 1956, as amended.

As a bank holding company, GMAC would obtain increased flexibility and stability to fulfill its core mission of providing automotive and mortgage financing to consumers and businesses. GMAC also expects to have expanded opportunities for funding and for access to capital as a bank holding company, according to a release from GMAC Financial Services.
"The benefits of this type of restructuring would allow us to put additional capital and liquidity resources immediately to work in financing consumers and automotive dealers," said Alvaro G. de Molina, GMAC chief executive officer.
What this means is that if GMAC becomes a bank holding company, or basically a bank, customers can deposit money there and GMAC can use that money to improve its balance sheet. With a higher balance sheet, or more liquidity, GMAC would be able to borrow money at cheaper rates and hopefully loan money to its customers at a cheaper rate.