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Banking 101: HRA vs. HSA - What's the Difference?GMAC Applies to Become Bank Holding Company and Seeks Bailout Funds
POSTED ON BY Ken Tumin
The parent of GMAC Bank, GMAC Financial Services, just announced that it has submitted an application to the Federal Reserve Board for approval to become a bank holding company. It also announced that that it submitted an application to the Treasury to participate in the Capital Purchase Program. This would give them access to the $700 billion intended to bailout the banks. More details of this is described in this CNN article.
The plan to become a bank holding company isn't new, but GMAC must be more confident that regulators will approve the application. Earlier this month I posted on a Bloomberg article which reported on GMAC's third quarter performance. It also mentioned the bank holding company plan:
That Bloomberg article also mentioned how GMAC Bank was "paying above-market rates to attract deposits through its bank." GMAC Bank continues to pay very attractive savings account and CD rates.
I'm not sure how this change at GMAC will affect GMAC Bank. GMAC's problems may be helping keep deposit rates up at GMAC Bank, so bailout funds may take some pressure off and allow GMAC Bank to be less aggressive with its rates. But if the bailout funds can help stabilize GMAC, I would think it would be better for GMAC Bank in the long term.
There was some concern early in the year that GMAC may be forced to divest GMAC Bank or to terminate the FDIC status. As this MarketWatch article describes, this issue was resolved in July when the FDIC granted GMAC a 10-year waiver. With GMAC becoming a bank holding company, this waiver may no longer be necessary.
I have more details on GMAC Bank and its savings accounts and CDs in this GMAC Bank review post. 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.
The plan to become a bank holding company isn't new, but GMAC must be more confident that regulators will approve the application. Earlier this month I posted on a Bloomberg article which reported on GMAC's third quarter performance. It also mentioned the bank holding company plan:
GMAC has been shut out of some credit markets, and the firm today repeated its hopes of converting to a bank holding company, which could make it eligible for help from the Treasury's $700 billion bailout fund. It's unclear whether regulators will approve GMAC's application, Chief Financial Officer Robert Hull said on a conference call.
That Bloomberg article also mentioned how GMAC Bank was "paying above-market rates to attract deposits through its bank." GMAC Bank continues to pay very attractive savings account and CD rates.
I'm not sure how this change at GMAC will affect GMAC Bank. GMAC's problems may be helping keep deposit rates up at GMAC Bank, so bailout funds may take some pressure off and allow GMAC Bank to be less aggressive with its rates. But if the bailout funds can help stabilize GMAC, I would think it would be better for GMAC Bank in the long term.
There was some concern early in the year that GMAC may be forced to divest GMAC Bank or to terminate the FDIC status. As this MarketWatch article describes, this issue was resolved in July when the FDIC granted GMAC a 10-year waiver. With GMAC becoming a bank holding company, this waiver may no longer be necessary.
I have more details on GMAC Bank and its savings accounts and CDs in this GMAC Bank review post. 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.
The ACH easiest to set up of any bank, transfers both ways and also give you access checks.