Dedicated to Deposits: Deals, Data, and Discussion

GMAC's Problems and its Effect on GMAC Bank - What Can be Learned from Lehman Brothers

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GMAC Financial Services, the parent of GMAC Bank, continues to struggle to raise the capital it needs to become a bank holding company. According to this Bloomberg article:
[GMAC has] sweetened terms on a debt swap designed to save the firm from bankruptcy and extended the deadline for a fourth time to lure more investors. ... Without the swap, GMAC has said its application to become a bank will fail, and analysts have said bankruptcy would likely follow

Lehman Brothers Bank

I'm not sure how all of these problems at GMAC will affect GMAC Bank. If GMAC files for bankruptcy, it's quite possible that GMAC Bank will continue without changes. That is was happened at Lehman Brothers Bank, FSB which is a subsidiary of Lehman Brothers. I emailed Lehman Brothers Bank yesterday, and here is the reply I received:
Lehman Brothers Bank, FSB is not included in the bankruptcy. The bank is operating as normal.

I reported on Lehman Brothers Bank in September 2007 when it was offering very competitive CD rates. The rates have remained low this year, even after the Lehman Brothers bankruptcy. The bank remains FDIC insured.

GMAC Bank's Latest Ratings for Soundness

GMAC Bank's ratings for soundness have recently changed a little:
  • BauerFinancial: 3 stars (adequate) based on 9/30/08 data vs. 3.5 stars (good) based on 6/30/08 data
  • Bankrate.com: 4 stars (sound) based on 9/30/08 data vs. 3 stars (performing) based on 6/30/08 data.
It's interesting to see how the ratings differ.

Risks for GMAC Bank Depositors

If you're a GMAC Bank depositor and you have under the FDIC insured limits, the ratings are not really important. GMAC Bank is FDIC insured (FDIC Certificate # 57803). Two common misconceptions that I hear over and over are the risk to accrued interest and the risk of delayed access. FDIC insures both the principal and the accrued interest. When a bank closes, you typically have access to your account from the acquiring bank on the next business day. When IndyMac and WaMu closed this year, I was able to access my online accounts as normal the next business day. There can be some delays if you're using POD accounts to extend your coverage or if you have brokerage deposits. For more FDIC info, please refer to my FDIC post on recent coverage changes.

There's no risk of losing your insured deposits, but there are some minor risks when a bank fails. As we've seen this year when banks like WaMu are closed, there's a good chance that the savings account rates may go down significantly after the new bank takes control. There's also a chance that the new bank may decide not to honor the failed bank's CD rates. You still have the option to close the CD without any early withdrawal penalty.

My Experience with GMAC Bank

I've been very happy with my GMAC Bank accounts. Besides the high rates, the best part of GMAC Bank has been their ACH transfer system. I can easily add links to many other external accounts. Transfers are fast (often completing in one or two days), and hold times are no more than two days. For more details about these accounts, please see my GMAC Bank review.

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Comments
3 comments.
Comment #1 by Anonymous posted on
Anonymous
I have used GMAC for several years. For the reasons you mentioned they continue to be my favorite of the dozen or so banks I use. They are the easiest to set up and use ACH, and depending on the account (I have 2 there now) you have checks for transfer to anywhere. Not too worried about them like I was wamu, wachovia etc. But yes, stay below the FDIC 250k.

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Comment #2 by Anonymous posted on
Anonymous
GMAC is not perfect and if your not particularly careful you can get ****ed when trying to open a new account. I tried to fund a cd online with a with an existing GMAC savings account. I followed the instructions and received no indication that the account would not be funded.

Two months later I received an account statement that had the CD on it but indicated the amount of the amount of the CD was zero. I called GMAC and they said I had not funded the CD in time (60 days). Worst of all, they claim I never requested the transfer. Though I have no "hard evidence" that I requested the transfer, my own personal notes taken at the time indicated I did and the the transfer was pending.

I admit I share some blame for not checking the account within 60 days. However, GMAC will not accept any responsibility. I can describe to them the process I followed to open the CD and what the transfer money screen looked like, but all they can say is they have no record of the requested transfer.

I am not trying to say they are evil but I am just telling you that they are not as great as other posts have indicated. I am closing my accounts with them even though they still have the best rates at this time. In my opinion, I can not trust them. If you are opening any type of new account with them I recommend watching them closely. Do not become complacent as I did.

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Comment #3 by Banking Guy (anonymous) posted on
Banking Guy
Thanks for the info. You are right about their CD application. It does seem to have issues. On my last CD application, it didn't go through right, and I had to call to get it finalized. I just mentioned this problem in this post. Sorry to read they didn't take any responsibility for this problem.

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