General Motors Acceptance Corporation approved by Fed as a bank holding company

Going on with the reports on handout of government rescue money, the Federal Reserve approved the application of the financing arm of General Motors for becoming a bank holding company. This in turn will allow General Motors Acceptance Corporation to apply for bailout from government's $700 billion Troubled Asset Relief Program.

Apart from being eligible to petition for rescue aid GMAC Financial Services having the status of a bank holding company will also be able to receive emergency loans directly from the Federal Reserve. In case GMAC got no support, it could have been forced into bankruptcy protection.

According to the statement made by the Federal reserve the emergency conditions occurred in view of the global crisis that is getting more severe in the financial system. Five days before the Federal reserve made its decision the Bush administration announced that it would provide emergency loans to General Motors and Chrysler LLC to buy them time to reorganize and avoid having to file for bankruptcy.