The ailing lender, part-owned by General Motors, is seeking to become a bank holding company so it can access the US governmentâ??s $700bn rescue fund for the financial industry. However, it needs to have a minimum of $30bn of regulatory capital to gain Federal Reserve approval.
GMAC said that its efforts to raise the necessary capital through a $38bn debt exchange had thus far been unsuccessful and it might withdraw its application for the bank charter if it does not reach the capital threshold by the end of the week.
"If GMAC is unable to successfully convert to a bank holding company and complete the GMAC and ResCap offers by December 31 2008, it would have a near-term material adverse effect on GMACâ??s business, results of operations, and financial position," the company said in a statement.
GMAC has been shut out of credit markets in recent months, bringing it to its knees less than six months after completing a $60bn debt restructuring to stave off bankruptcy for Residential Capital. GMACâ??s car loan business has been squeezed as a result. With its own credit rating in junk territory, GMAC did not write a single lease last month and financed just 6 per cent of GMâ??s retail sales, down from almost half a year ago.
GMACâ??s problems intensify the pressure on private equity firm Cerberus Capital Management, which bought a 51 per cent stake in the lender two years ago. Cerberus also owns 80 per cent of Chrysler, including the ailing carmakerâ??s financial services arm.