The US Federal Reserve on Wednesday approved a request by GMAC, the troubled financial arm of General Motors, to become a bank holding company, allowing it to tap government bailout funds and emergency loans.
The move, announced only hours before Christmas Day, boosts the prospects of General Motors after the US government last week approved a US$13.4 billion rescue loan package for GM and Chrysler to stave off collapse amid tight credit and dismal sales.
GMAC faced possible bankruptcy, jeopardizing financing for GM car dealers and customers, and its demise could have dragged down the Detroit automaker’s fortunes with it.
“In light of the unusual and exigent circumstances affecting the financial markets, and all other facts and circumstances, the Board has determined that emergency conditions exist that justify expeditious action on this proposal” for changing GMAC’s legal status, the Fed said in its decision, which the board approved four votes to one.
Under the move, GM and Cerberus Capital Management must reduce their ownership stakes in GMAC, the Fed said.
GM, which owns 49 percent of GMAC, has to cut its ownership share to less than 10 percent in voting shares and equity. Cerberus, the private equity owner of Chrysler, must reduce its 51-percent stake to no more than 14.9 percent in voting shares and 33 percent in total equity, the decision said.
The move will “benefit the public by strengthening GMAC’s ability to fund the purchases of vehicles manufactured by GM and other companies and by helping to normalize the credit markets for such purchases,” the Fed said.
GMAC chief executive Alvaro de Molina in a statement hailed the decision as “a key turning point” for the company.
“It is critically important to our company and the broader economy to resume responsible lending to consumers and businesses,” he said.
GMAC, by becoming a federally regulated bank holding company, becomes the latest firm to gain access to a share of the US$700 billion government bailout package initially introduced to shore up financial firms.
Debt-strapped GMAC had said earlier this month it did not expect the Federal Reserve would grant its request as it could not meet capital requirements.
Super Typhoon Kong-rey is the largest cyclone to impact Taiwan in 27 years, the Central Weather Administration (CWA) said today. Kong-rey’s radius of maximum wind (RMW) — the distance between the center of a cyclone and its band of strongest winds — has expanded to 320km, CWA forecaster Chang Chun-yao (張竣堯) said. The last time a typhoon of comparable strength with an RMW larger than 300km made landfall in Taiwan was Typhoon Herb in 1996, he said. Herb made landfall between Keelung and Suao (蘇澳) in Yilan County with an RMW of 350km, Chang said. The weather station in Alishan (阿里山) recorded 1.09m of
NO WORK, CLASS: President William Lai urged people in the eastern, southern and northern parts of the country to be on alert, with Typhoon Kong-rey approaching Typhoon Kong-rey is expected to make landfall on Taiwan’s east coast today, with work and classes canceled nationwide. Packing gusts of nearly 300kph, the storm yesterday intensified into a typhoon and was expected to gain even more strength before hitting Taitung County, the US Navy’s Joint Typhoon Warning Center said. The storm is forecast to cross Taiwan’s south, enter the Taiwan Strait and head toward China, the Central Weather Administration (CWA) said. The CWA labeled the storm a “strong typhoon,” the most powerful on its scale. Up to 1.2m of rainfall was expected in mountainous areas of eastern Taiwan and destructive winds are likely
The Central Weather Administration (CWA) yesterday at 5:30pm issued a sea warning for Typhoon Kong-rey as the storm drew closer to the east coast. As of 8pm yesterday, the storm was 670km southeast of Oluanpi (鵝鑾鼻) and traveling northwest at 12kph to 16kph. It was packing maximum sustained winds of 162kph and gusts of up to 198kph, the CWA said. A land warning might be issued this morning for the storm, which is expected to have the strongest impact on Taiwan from tonight to early Friday morning, the agency said. Orchid Island (Lanyu, 蘭嶼) and Green Island (綠島) canceled classes and work
KONG-REY: A woman was killed in a vehicle hit by a tree, while 205 people were injured as the storm moved across the nation and entered the Taiwan Strait Typhoon Kong-rey slammed into Taiwan yesterday as one of the biggest storms to hit the nation in decades, whipping up 10m waves, triggering floods and claiming at least one life. Kong-rey made landfall in Taitung County’s Chenggong Township (成功) at 1:40pm, the Central Weather Administration (CWA) said. The typhoon — the first in Taiwan’s history to make landfall after mid-October — was moving north-northwest at 21kph when it hit land, CWA data showed. The fast-moving storm was packing maximum sustained winds of 184kph, with gusts of up to 227kph, CWA data showed. It was the same strength as Typhoon Gaemi, which was the most
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