GMAC wants to become a BANK!

In late September we witnessed the once-upon-a-time world’s top investment banks, and the only two survivors of the investment bank massacre, Goldman Sachs and Morgan Stanley applying for a changes in status! Quite an irony this is, if one considers the “status” they enjoyed for so long being investment bankers or smutty traders.

Now, the day has come that other troubled companies also saw reason and ask to be baptised “bank holding company”. It’s like I can hear them screaming “Please save us- save us – not them- us-why them- and not us – Pleeeeease save us!”. GMAC LLC, General Motor’s car dealers’ largest lender has asked for permission to be treated as a bank holding company so it can get access to the Treasury’s big fat pot of $700 billion –I have to say this pot sounds empty already to me.

The lender is also trying to swap debt and raise cash as quickly as possible by disposing a business unit earlier this month. The lender is looking to avoid a possible cash squeeze by agreeing to sell another two insurance units in due course.

The Treasury’s $700 billion rescue fund announced in October and set to revive the financial industry, includes $125billion that were originally supposed to provide relief to smaller regional lenders. In the next few weeks, we will definitely see more insurers, lenders and other finance companies converting into banks to become eligible to join the scheme.