GMAC's Bank Holding Company Plans May Falter

GMAC Financial Services warned Wednesday that unless more of its note holders agree to an exchange program, its plans to become a bank holding company and potentially tap TARP funding will collapse. The exchange offer involves $38 billion worth of corporate notes. (GMAC extended the "early delivery" time of the exchange three days to 5 p.m. this Friday.) To date 21% of GMAC, and 21% of Residential Capital Corp. note holders, have agreed to an exchange, far shy of the 75% needed. In a statement, GMAC Financial - the parent of ResCap, the nation's sixth largest mortgage servicer - said the Federal Reserve is requiring GMAC to have minimum regulatory capital of $30 billion to become a bank holding company. The note exchange offer is key to achieving that goal. The exchange offer involves cash and/or issuing new corporate notes. In a public filing back in November ResCap warned that if GMAC stops providing liquidity to its mortgage division it could be forced into bankruptcy. GMAC Financial is 51% owned by hedge fund giant Cerberus Capital and 49% owned by General Motors, the ailing automaker. ResCap services $391 billion in home mortgages, according to the Quarterly Data Report.