Today, GMAC Financial Services (GMAC) announced that it has applied to the Federal Reserve for approval to become a bank holding company under the Bank Holding Company Act and that it has submitted an application to the U.S. Treasury to participate in the Capital Purchase Program (CPP), conditional upon becoming a bank holding company. By becoming a bank holding company, GMAC said that it would be able to “obtain increased flexibility and stability to fulfill its core mission of providing automotive and mortgage financing to consumers and businesses.” If GMAC’s application is approved, GMAC Bank will become a Utah chartered Federal Reserve member bank.

GMAC also announced that it has commenced separate “private exchange offers and cash tender offers for $38 billion” of certain outstanding GMAC and Residential Capital, LLC debt securities to “increase capital levels while reducing the amount of GMAC’s and [Residential Capital’s] outstanding debt in connection with GMAC's capital plan relating to its application to become a bank holding company.”

Similarly, last week American Express was approved to become a bank holding company, CIT applied to become a bank holding company and four insurers applied to become savings and loan holding companies, in each case with the goal of participating in the CPP.