Fed allows GMAC to become a bank

WASHINGTON, Dec. 25 (UPI) -- The U.S. Federal Reserve has given permission for automotive financial firm GMAC to become a bank, which will allow it to apply for federal bailout funding.

The Fed approved shifting GMAC to a bank holding company Wednesday, The Washington Post reported Thursday.

Equity fund Cerberus Capital Management, owners of Chrysler LLC, owns 51 percent of GMAC, while General Motors Corp. owns 49 percent.

The two companies, which rely on GMAC's automotive loans, must now sell a bulk of their shares becasue commercial companies are not permitted to own banks.

But the move, allowing GMAC to tap into the government's $700 billion Troubled Assets Relief Program, "is critically important to our company and to our broader economy to resume responsible lending to customers and businesses," GMAC Chief Executive Officer Alvaro de Molina said in a statement.