NEW YORK — GMAC Financial Services' management team announced that it may withdraw its application to become a bank holding company due to an inability to raise enough capital.

GMAC indicated that it has extended the early delivery time with respect to its separate private exchange offers and cash tender offers to purchase and/or exchange certain of its and its subsidiaries and Residential Capital, LLC outstanding notes by three days to 5 p.m., New York City time, on Friday, Dec. 12, in order to provide investors with a final opportunity to consider the GMAC and ResCap offers and raise the capital it will need to meet Federal Reserve requirements.

Basically, GMAC needs to raise $30 billion in capital to receive bank status from the Federal Reserve, and the company is preparing in case it doesn't meet this goal. GMAC officials had hoped bank status would allow the company to take advantage of the $700 billion U.S. bailout program for the financial services industry and improve GMAC's ability to raise funding.

"The Federal Reserve has required GMAC to, among other things, achieve a minimum amount of total regulatory capital of $30 billion in connection with its application. In order for such condition to be satisfied, among other things, the estimated overall participation in the offers would be required to be approximately 75 percent on a pro rata basis. The Federal Reserve has informed GMAC that if GMAC is unable to meet these capital requirements, it will not approve GMAC's application to become a bank holding company," GMAC officials said.

"Based on the results of the GMAC and ResCap offers to date, GMAC would not obtain a sufficient amount of total regulatory capital in connection with the GMAC and ResCap offers to meet the requirements set forth by the Federal Reserve for GMAC to become a bank holding company under the Bank Holding Company Act of 1956, as amended," the company stated.

The financial institution reported that it does not believe it has the ability to make further changes to the GMAC and ResCap offers following the new deadline at 5 p.m., New York City time, on Friday, Dec. 12 and consummate the GMAC and ResCap offers prior to the end of the calendar year.

"Accordingly, if the requisite participation in the offers has not been received, GMAC management intends to withdraw its application to become a bank holding company. If GMAC is unable to successfully convert to a bank holding company and complete the GMAC and ResCap offers by Dec. 31, 2008, it would have a near-term material adverse effect on GMAC's business, results of operations and financial position," executives explained.

To date, approximately $6.3 billion in aggregate principal amount (or 22 percent) of the outstanding GMAC old notes have been tendered in the GMAC offers and approximately $2 billion in aggregate principal amount (or 21 percent) of the outstanding ResCap old notes have been tendered in the ResCap offers.

Credit Unions Team Up to Help GM

A partnership between General Motors and 1,200 Midwest credit unions was recently announced and is designed to offer credit union members supplier pricing on new vehicles and make $10 billion in auto loans available.

More than 4 million credit union members in Michigan will be eligible this December through June of 2009.

The Michigan Credit Union League said it will join the Illinois, Indiana and Ohio credit union associations in the partnership to fill the gap as other auto lenders retreat from the market. Credit unions should send members to LoveMyCreditUnion.org for more information on the program.

The "Invest in America" campaign could be expanded nationally after the six-month pilot. The discounts will give credit union members approximately 4.5 percent off MSRP.

Customers also will have access to lower loan rates: Credit unions average 5.4 percent while banks average 6.9 percent.

CUcorp will coordinate the pilot program, and both Ford and Chrysler have also been invited to participate and are working toward similar agreements. The credit union consortium includes the four state trade associations and CUNA.