GMAC files with Fed for bank holding status

NEW YORK -- GMAC Financial Services has applied to the Federal Reserve to become a bank holding company, which would allow General Motors' financing arm to be eligible for aid under the Treasury's $700 billion bank rescue plan.

GMAC says the change in status would shore up its capital position and allow it to continue providing automotive and mortgage financing.

GMAC is majority owned by private equity firm Cerberus, which also owns most of Chrysler. General Motors Corp., which itself is running out of cash, owns a 49 percent stake in GMAC.

GMAC also is launching cash tender offers to buy or swap debt held by its units and mortgage business Residential Capital LLC for cash, new notes or preferred stock, in a move to boost capital levels and reduce debt.