After months of failed attempts, General Motors' financing arm, GMAC, was granted bank holding status from the Federal Reserve on Dec. 24 in a move that will allow the struggling firm to access funds from the Treasury's Troubled Asset Relief Program.
"In light of the unusual and exigent circumstances affecting the financial markets, and all other facts and circumstances, the Board has determined that emergency conditions exist that justify expeditious action on this proposal in accordance with the provisions of the BHC Act and the Board's regulations," read a statement from the Fed.
The move comes after months of failed attempts from the financial institution, which has sought a piece of the $700 billion financial system government bailout program, but comes with the condition that neither GM nor Cerberus Capital Management (owner of Chrysler) can maintain a controlling portion of GMAC.
However, the funds may take to time to reach the beleaguered institution. The Treasury Department has already distributed the first $350 billion tranche of funds, and the next half is subject to Congressional approval. Furthermore, U.S. Treasury Secretary Henry Paulson is already widely unpopular on Capitol Hill for his handling of the first part of the TARP funds, and may possibly leave the task to his successor, Timothy Geithner, who will become the new Treasury Secretary on Jan. 20.
Shares of GM are up 13.85% in pre-market trading.
By Erik Kevin Franco and edited by Stephen Huebl
©CEP News Ltd. 2008