GMAC Drew `False Testimony' Sanction Years Before Eviction Halt

Bloomberg

Ally Financial Inc.’s GMAC Mortgage unit, which suspended evictions in 23 states last week after finding employees didn’t verify foreclosure documents, was sanctioned in 2006 for similar practices, court records show.

GMAC gave “false testimony” when it justified foreclosures by submitting sworn affidavits signed by a mortgage executive who later said in a deposition she didn’t actually review the loan documents or sign in the presence of a notary, according to a 2006 court order filed in Duval County, Florida. In response to the sanctions, GMAC Mortgage directed employees to “read and fully understand” court documents before signing.

“Do not sign unless you have that comfort level,” said a policy directive from GMAC Mortgage’s James Barden, then- associate counsel for the legal staff. “It is the integrity of our cases that is at stake and we cannot afford anything less than full accuracy.”

GMAC Mortgage is facing new allegations in court documents that it evicted homeowners without verifying that borrowers actually defaulted or whether the firm had legal standing to seize the homes. Ally, the Detroit-based auto and home lender, said this week it found a “technical” deficiency in its foreclosure process allowing employees to sign documents without a notary present or with information they didn’t personally know was true.

Loan Industry

Ally declined to say how many loans may be affected. The firm, formerly known as GMAC Inc., ranked fourth among U.S. home-loan originators in the first six months of this year with $26 billion, and fifth among loan servicers, with a $349.1 billion portfolio, according to Inside Mortgage Finance, an industry newsletter. It’s also the beneficiary of more than $17 billion in U.S. bailout funds.

Servicers conduct billing and collections on mortgages, sometimes for other firms that actually own the loans, and handle foreclosures when borrowers default.

Gina Proia, a spokeswoman for Ally, confirmed that a policy directive was issued in 2006, “but we recently became aware of a breakdown in the process. The process has since been addressed and the prior practice is no longer taking place.”

Mark Paustenbach, a spokesman for the U.S. Treasury Department, which owns 56.3 percent of Ally, declined to comment. Kim Fennebresque, a director named by the Treasury to serve as an independent board member, didn’t return calls.

In a statement earlier this week, Proia said “the entire situation is unfortunate and regrettable and GMAC Mortgage is diligently working to resolve the situation,” and that “there was never any intent on the part of GMAC Mortgage to bypass court rules or procedures.” Florida was among the 23 states where evictions have been halted.

Verification

Lawyers defending borrowers have accused mortgage firms including GMAC and JPMorgan Chase & Co. of foreclosing on homeowners without making proper efforts to verify the accuracy of the documents. In foreclosure cases, companies typically file affidavits to start court proceedings. Affidavits are statements written and sworn in the presence of someone authorized to administer an oath, such as a notary public.

The 2006 case stems from a GMAC Mortgage foreclosure that began in August 2004 on a home owned by Robert and Lillian Jackson. The filing included an affidavit signed by a GMAC officer laying out the amount owed on the loan.

Florida Circuit Court Judge Bernard Nachman sanctioned GMAC in May 2006, saying that the company “submitted false testimony to the court in the form of affidavits of indebtedness.” The company was ordered to submit an explanation and confirmation that the policies were changed, and told to pay defendants’ legal costs of $8,135.55.

Legal Directive

GMAC’s legal department issued a statement afterward that told employees “not to sign verifications on court pleading documents unless you have independently reviewed and checked the facts.” The policy, distributed in June 2006, also stated in italics and boldface that employees should sign documents only in the presence of a notary. GMAC told the court four years ago that the policies were “being corrected.”

In December 2009, a GMAC Mortgage employee said in a deposition that his team of 13 people signed about 10,000 affidavits and other foreclosure documents a month without verifying their accuracy. The employee’s supervisor is the same executive sanctioned in the 2006 case.

GMAC’s internal review discovered the new discrepancies “a few months ago” and halted the practice, according to Proia’s statement earlier this week. Barden, who wrote the 2006 directive, and the two employees still work at GMAC, Proia said. Barden didn’t return a request for comment left on his work phone.

GMAC Impact

“They’re acting like this is a new problem,” said O. Max Gardner III, a bankruptcy attorney at Gardner & Gardner PLLC in Shelby, North Carolina, who isn’t directly involved in either GMAC case. “It’s the exact same thing,” Gardner said. “This is not just a GMAC problem. This is an industry-wide problem.”

Deborah Rhode, a Stanford University law professor and director of the school’s Center on the Legal Profession, said GMAC Mortgage’s behavior may amount to misleading the court.

“It’s not ‘technical’ when people attest under oath to knowledge they don’t have, and it doesn’t matter that in fact there isn’t actual error or discrepancy,” Rhode said. “Any court would take this very seriously.”

Judges could decide to dismiss the foreclosures, sanction the attorneys and company or levy a “substantial” financial penalty that would “get their attention,” she said.

The U.S. took control of Ally as part of a larger effort to prop up auto manufacturers. On a national level, regulators and lawmakers are trying to persuade bankers to avert foreclosures as seizures of homes by banks set records. Bank repossessions climbed 25 percent in August from a year earlier to 95,364, according to RealtyTrac Inc., the Irvine, California-based data provider.

GM Re-Thinking the Auto Lending Business

Bloomberg / Business Week

General Motors Co. may return to the auto-lending business more than three years after selling control of GMAC LLC, according to three people familiar with the company’s plan.

GM may buy back the GMAC business, start a new finance unit or form a partnership with banks and other lenders, said the people, who asked not to be identified because details are private. Chief Executive Officer Ed Whitacre wants to form an in-house lender before selling shares in GM as soon as the fourth quarter, one person said.

Having a so-called captive credit arm may boost GM’s profit, enable dealers to offer better terms on leases and loans, and make an initial public offering more appealing to investors, said Rebecca Lindland, an IHS Global Insight analyst in Lexington, Massachusetts.

“The IPO is going to be more of a success if they can sell more vehicles than they have been selling,” Lindland said. “They should be able to do that if they can be more aggressive in their financing. Having their own finance company would certainly help.”

Whitacre has his management team exploring all options, the people said. Tom Wilkinson, a GM spokesman, declined to comment.

GMAC is now known as Ally Financial Inc. and is 56 percent owned by the U.S. Treasury after an injection of $17.2 billion under the Troubled Asset Relief Program.

New Name

Meg Reilly, a Treasury Department spokeswoman, had no immediate comment, and Ally’s Gina Proia said an acquisition of its auto-finance business by GM was “speculation.”

“We remain committed to improving our performance, repaying the U.S. taxpayer, and providing our customers - automakers, dealers and consumers alike - with exemplary service and compelling products to meet their needs,” Ally Chief Executive Officer Michael Carpenter said today in a statement.

GM sold 51 percent of Detroit-based GMAC to private-equity firm Cerberus Capital Management LP in November 2006 as the biggest U.S. automaker ran low on cash. Since then, GM has had to rely on outside lenders, including GMAC.

The Federal Reserve approved GMAC’s bid to become a bank- holding company in December 2008, easing the threat of a default that would have further tightened credit for GM dealers as the recession deepened and auto sales plunged.

GM would probably want to acquire only the automotive business from Ally, and not operations such as the former ResCap mortgage unit, said Mark Wakefield, a director at Southfield, Michigan-based turnaround firm Alix Partners.

Alix is winding down GM’s bankrupt predecessor, General Motors Corp., which is now called Motors Liquidation Co. Wakefield said he isn’t involved in any consideration of forming a new finance company.

Retaking Control?

GM retaking control of the former GMAC’s auto-lending operations would require working out a solution with Chrysler Group LLC, which also uses Ally, Wakefield said.

Should GM own more than a 10 percent stake of any of Ally’s lending businesses, the finance unit would have to relinquish its bank-holding company status and wouldn’t have access to the Fed’s discount window for cheap funds, Wakefield said.

“It would take a while to convince the market that GMAC is safe and sound,” Wakefield said. “It will take a while to claw their way to a borrower rate that is competitive.”

Competitors that own finance companies can use in-house lenders to offer more-attractive car loans or leases, boosting sales, according to Colin Langan, a UBS Securities LLC analyst in New York. Ford Motor Co. is among the automakers in the U.S. with its own credit unit.

‘More Aggressive’

“It makes it much easier to do zero-percent financing and you can be a bit more aggressive in who you lend to,” said Langan, who recommends buying Ford shares.

GM also may benefit from having a finance unit that could pump up auto profits. Ford’s first-quarter profit was buoyed by $828 million in pretax operating income from Ford Motor Credit.

Russ Shelton, owner of Shelton Pontiac Buick GMC Inc. in Rochester Hills, Michigan, said GM dealers would welcome an in- house finance arm.

“Probably the biggest missing piece for GM is financing,” Shelton said. “Getting a customer financed today is the hardest thing, even if they have good numbers. I think we could probably overcome some of that with a captive finance arm.”

Pelosi, Obama Officials To Tour Detroit Auto Show

USA Today

Months after the government took large ownership stakes in General Motors, Chrysler and auto lender GMAC Financial Services, top lawmakers and members of the Obama administration will be taking a close look at their investment.

House Speaker Nancy Pelosi, D-Calif., House Majority Leader Steny Hoyer, D-Md., Transportation Secretary Ray LaHood and others will meet with company executives, state and local leaders and tour vehicle displays Monday at the North American International Auto Show in Detroit, one of the auto industry's annual showcases.

Pelosi said they would visit Detroit "to see firsthand the innovative technologies the industry is investing in to create the jobs of the future and to ensure our national competitiveness. We go to Detroit with our commitment to continue to preserve our manufacturing base, which is essential to our economic and national security."

Lawmakers frequently visit the auto show but organizers said they received more interest from Washington this year, only months after the government steered General Motors and Chrysler through bankruptcy helped by billions in federal aid. GMAC, a key lender to GM and Chrysler dealers and customers, recently received its third taxpayer-funded bailout.

"This year we were swamped with additional requests," said Doug Fox, the auto show's chairman. Fox said the auto show created a separate gray-colored credential because of the large demand from lawmakers and administration officials, distinguishing them from credentials issued to journalists, auto dealers and car company employees and executives.

With steep declines in auto sales and massive job losses, the Obama administration has awarded billions in funding for car companies to retool their auto plants to build more fuel-efficient cars, provided grants to spur the development of advanced batteries and pushed retraining programs for laid-off auto workers.

Pelosi will meet with Michigan Gov. Jennifer Granholm and Detroit Mayor Dave Bing and is expected to be joined by members of her House leadership team and members of Michigan and Ohio's congressional delegation. Sen. Tom Carper, D-Del., who has visited the show in past years, will also visit the exhibits.

LaHood and Labor Secretary Hilda Solis will represent the administration, which will include officials with the Transportation Department and the U.S. Environmental Protection Agency. The two agencies oversee regulations for the industry involving fuel efficiency, safety and tailpipe emissions.

The auto show will feature 60 vehicle debuts and attract more than 5,000 journalists from 50 countries. The exhibit at Detroit's Cobo Center will include a 37,000-square foot venue called "Electric Avenue," featuring electric vehicles and prototypes from a dozen manufacturers.

$3.8 Billion More In TARP Aid Makes U.S. Majority Owner Of GMAC

USA Today

WASHINGTON — The government on Wednesday provided a fresh $3.8 billion cash infusion to stabilize GMAC Financial Services as the financing company struggles with hefty losses in its home mortgage unit.

The Treasury Department said the new aid, which comes from a taxpayer-financed bailout fund, is less than the roughly $6 billion the government had earlier thought GMAC would need to stabilize the company.

The fresh infusion is on top of $12.5 billion in taxpayer money Detroit-based GMAC has already received from the government. The new agreement will boost the federal government's ownership in GMAC to 56%, from 35%.

Even with the government upping its stake, Treasury officials said the government intends to stick to its policy of leaving day-to-day business decisions about financing to GMAC management. Still, with the additional stake, the government will have the right to appoint two additional directors to the company's board, Treasury officials said.

GMAC will continue to be subject to executive pay restrictions imposed by the government's pay czar.

Shoring up GMAC has been a major component of the Obama administration's massive effort to rescue ailing automakers General Motors and Chrysler. The lender provides critical wholesale financing to thousands of GM and Chrysler auto dealers, allowing them to stock their showroom floors with vehicles.

But GMAC also operates a large residential mortgage business, ResCap, which was battered by the recent housing collapse. GMAC was obligated by the Treasury Department to raise $11.5 billion in additional capital earlier this year after failing the government's stress test for banks, largely because of ResCap's big losses.

The stress tests were to see whether banks had enough capital even if the economy worsens next year. However, GMAC had difficulty raising money because of its financial woes, making an extra government infusion necessary.

Michael Carpenter, who succeeded Alvaro De Molina as the company's CEO in November, has said the company would need no more than $5.6 billion in aid. Lawmakers estimated the company would receive between $2 billion and $5 billion in additional aid.

Any additional government money would come from the $700 billion Troubled Asset Relief Program that has been used to bail out troubled financial institutions and automakers.

Even after the latest capital infusion, the government will likely take steps to help GMAC as it tries to ensure the recovery of GM and Chrysler, said Kirk Ludtke, senior vice president at CRT Capital Group. That includes helping GMAC refinance its debt as it comes due, he said.

"The government has come this far, it is not going to destabilize GMAC at this point," he said.

GMAC still remains on shaky financial ground. Last month, it reported a quarterly loss of $767 million, though the results were an improvement over a giant loss a year ago. ResCap lost $747 million during the third quarter as homeowners continued to default on their mortgages in large numbers.

GMAC, which also provides financing to car buyers, has also been hurt by the rapid decline of the U.S. auto industry after sales crumbled due to the recession and financial woes of the big automakers. Sales of cars and trucks were down 24% through November compared with the same part of last year. The industry is expected to sell around 10 million cars this year, one of the worst performances for autos sales in decades.

Despite the drop in auto sales, GMAC's auto lending business has shown some signs of revival. The auto financing division earned a profit of $395 million during the third quarter. The company's online consumer banking unit, Ally Bank, has also been a bright spot by bringing in billions of dollars in new deposits by offering relatively high interest rates. It now accounts for about 29% of GMAC's assets.

GMAC Chief Forced To Resign

Wall Street Journal

In a surprise move, the head of GMAC Financial Services -- the giant, taxpayer-supported auto lender -- was ousted Monday.



The forced resignation of Alvaro de Molina after only 19 months as chief executive caps a series of clashes with regulators and mounting board frustration over his management of the Detroit company. GMAC, which finances inventory for thousands of car dealerships in the U.S., to date has received $12.5 billion in taxpayer money, giving the U.S. government a 35.4% stake and growing power over the firm's trajectory.

Government officials said they made no suggestion to GMAC's board to dump Mr. de Molina. "That was 100% GMAC's decision," Treasury spokesman Andrew Williams said.

The shakeup comes as GMAC talks to regulators about a third helping of federal aid. The U.S. is likely to inject billions more on top of the money already given.

GMAC said Mr. de Molina would be succeeded immediately by Michael A. Carpenter, a GMAC director who previously led Citigroup Inc.'s global investment bank. Mr. Carpenter joined the board in May as part of the government's toughened scrutiny of GMAC, following a second infusion of federal capital. The Treasury Department filled two of the seven board seats.

In recent months, Mr. de Molina faced directors who wanted increasingly assertive roles in day-to-day management, according to people familiar with the situation.By mid-October, the board had begun thinking about a new CEO, according to these people, and told officials from the Federal Reserve, Federal Deposit Insurance Corp. and Treasury Department of their thinking.

Mr. de Molina was told of his ouster around noon Monday in a meeting at the midtown Manhattan offices of law firm Davis Polk & Wardwell LLP, GMAC's outside counsel.

According to a person who attended the meeting, Mr. de Molina said he would leave without severance pay and didn't want to do anything that could expose GMAC to criticism. Mr. de Molina declined to comment.

His successor, Mr. Carpenter, has had a storied history in the financial world. In the mid-1990s, he was ousted as Kidder, Peabody Group Inc.'s chairman and CEO after the securities firm was hit by a bond-trading scandal involving a rogue trader, Joseph Jett, booking fictitious trades. He went on to help build Citigroup into one of the most powerful financial institutions in the world.

With Mr. de Molina gone, Mr. Carpenter and GMAC directors plan to resolve the problems facing GMAC's Residential Capital LLC mortgage unit, which will improve GMAC's ability to secure low-cost funding via the capital markets, and focusing GMAC on a core auto-lending mission.

The goal is for GMAC to broaden its focus beyond serving General Motors and Chrysler to include other brands. The company is likely to roll out an aggressive marketing strategy to lure new customers and auto dealerships.

People close to Mr. de Molina dispute the view that GMAC's strategy needs adjusting, saying he had a plan to return the company to profitability in 2010, pay the government back, cut costs, focus on the auto business and fund new lending via bank deposits. The blueprint that Mr. Carpenter laid out Monday, they said, was no different. Directors "did not give him the time to let this play out," said one person close to him.

What hurt Mr. de Molina in the end was the company's growing financial lifeline from the government and his deteriorating relationship with the board. In May, the seven-person board got five new members, including two appointed by Treasury: Former Fannie Mae chief financial officer Robert Blakely and former Lazard investment banker Kim Fennebresque. Mr. de Molina wasn't close to three other directors named in May, including Mr. Carpenter, said a person familiar with his thinking.

The board set a roughly six-month time frame to decide whether or not major changes were needed.

As time passed, some directors began to feel that Mr. de Molina had been focused primarily on stabilizing the teetering company but hadn't presented a clear strategy for the future.

"The company's focus was on survival mode," says one person close to the board. "That was very important. We're now at a moment in time where the focus needs to shift to, 'What will the company look like in the future and how do we make it sing operationally?'"

Some directors also complained Mr. de Molina wasn't keeping them fully in the loop about important matters facing the company. The frustration was a two-way street. Executives chafed under what they viewed as slow decision making on the part of the board, noting that many alternatives for Residential Capital had already been presented to directors.

Mr. de Molina was surprised by the board's decision, according to several people close to him, although there was a period earlier in the year when the CEO thought he might be removed amid disputes with regulators.

Mr. de Molina also has clashed with the head of Cerberus Capital Management, Stephen Feinberg, who had a seat on GMAC's board. Cerberus installed Mr. de Molina as chief operating officer in August 2007 and elevated him to CEO the following year.

The 62-year-old Mr. Carpenter, a U.K. native, has a long history in corporate America but hasn't run a major finance company in many years. He was a senior executive at General Electric Co. in the 1980s, before becoming Kidder's chairman and CEO from 1989 through 1994, before being pushed out after the scandal there.

Despite the black eye from Kidder, Mr. Carpenter was soon recruited by Sandy Weill as he built the sprawling financial conglomerate that became Citigroup. Mr. Carpenter was among those under consideration to succeed Mr. Weill as Citigroup's CEO, but he was passed over for the job.

Mr. Carpenter resigned from Citigroup in 2006, chafing under Mr. Weill's handpicked CEO successor, Charles Prince. He and another former Citigroup executive in 2007 launched their own private-equity and hedge-fund firm, Southgate Alternative Investments.

New Dealership Incentives From GMAC

AP Story

NEW YORK — GMAC Financial Services, the former financing arm of General Motors Co., is making a new push to recapture its share in the auto financing business by offering incentives to its most loyal dealers.

The government-subsidized lender starting Oct. 1 will offer cash incentives and services to its U.S. dealers, spokeswoman Sue Mallino said Thursday. The program will be called Ally Dealer Rewards — named after its newly rebranded consumer banking arm Ally Bank — although the program will be administered by GMAC's automotive unit.

GMAC's decision to brand the program under its Ally name signals the growing importance of the brand, Mallino said.

"We were just extending the (Ally) brand name through this program because it connotes an advocacy for the customer," she said.

GMAC rebranded its banking division earlier this year, hoping to smooth over its image and lure new customers after its ailing finances forced it to accept billions of dollars in government assistance.

In May, the Treasury Department announced a new $7.5 billion injection for GMAC. It was GMAC's second shot of cash from the government, though it was short of the $11.5 billion that the government's "stress test" showed it needs to stay afloat if the economy worsens.

The Treasury now has a 35 percent stake in GMAC.

Mallino likened GMAC's new dealer incentive program to rewards programs offered by credit card companies to frequent users. Dealers who use the full complement of GMAC services, she said, will be rewarded with cash, remarketing services or other perks.

GMAC rebranded its banking division earlier this year, hoping to smooth over its image and lure new customers

The program will not have any bearing on GMAC's lending to consumers seeking auto loans, Mallino said.

The move is GMAC's latest effort to recapture its once-dominant share in the auto financing market. Recently, the company became the preferred lender for Chrysler Group LLC and has begun offering leasing again to both GM and Chrysler customers.

Leasing virtually collapsed during the financial crisis as the resale value on leased cars plummeted and the practice stopped being profitable for lenders.

GMAC's market share in the auto financing market has fallen sharply during the crisis as its cash available for lending declined. Banks like J.P. Morgan Chase and Wachovia, meanwhile, scooped up new business.

GMAC had 3 percent of the auto financing market in the first six months of the year, down by almost half in the same period a year ago, according to Experian Automotive.

GMAC Cutting Off Lending To Chrysler Dealers

Story from the Wall Street Journal

GMAC LLC is suspending wholesale financing for certain Chrysler Group LLC dealers it considers to be too risky to lend to, GMAC and Chrysler confirmed Wednesday.

The move could ultimately push more Chrysler dealers out of business and hurt the company's ability to sell vehicles. During its bankruptcy restructuring, Chrysler shed 789 dealers.

GMAC, formerly the captive lending arm of General Motors Corp., recently took over financing of Chrysler dealers' inventory after Chrysler's own lending arm stopped doing so.

About 60% of the roughly 2,400 dealers who survived Chrysler's bankruptcy applied for interim wholesale financing with GMAC, according to Chrysler. So far about 6% -- more than 80 -- have been informed that their wholesale financing has been temporarily suspended, the company said.

GMAC declined to say how many of the dealers so far have been vetted to continue to receiving loans, and refused to confirm the number of dealers it has suspended. The company said it will need about six months to complete the vetting process.

GMAC said the process was part of normal due diligence. GMAC's goal in part is to avoid doing business with dealers who are too big a financial risk, Mike Stoller, a company spokesman said.

The lender earlier provided interim financing to all Chrysler dealers who applied for it. It received billions in government aid to do so, including $7.5 billion in late May.

But surviving Chrysler dealers always were set to be vetted later, said Mr. Stoller. "The next step was always to go back and look at each of the dealerships individually," he said. Mr. Stoller said GMAC wasn't working with Chrysler on this effort and that it had "no particular goal in mind" for the number of dealers to continue to receive loans.

According to GMAC, suspended dealers typically have 30 days to improve their balance sheets or they must find another company to provide them wholesale lending.

But few Chrysler dealers GMAC rejects are likely to gain the additional capital to get back on board, or find another lender, such as a large bank, willing to take on their loan needs, given the current lending market.

"This definitely puts them [Chrysler] at a disadvantage," said Mark Rikess, founder of Rikess Group, a California-based dealer consulting firm. "They've got a very weakened distribution channel right now."

The car maker still has too many dealers, he said, but for the moment it needs those it has to survive and buy its vehicles.

Chrysler and GM both rely on GMAC for much of their retail-customer and wholesale financing. Chrysler Financial has been forced to wind down its lending due to a lack of capital.

This leaves Chrysler as the only major U.S. auto maker without a finance firm with which to work closely.

Chrysler expects to have most of its surviving plants running again by July, and will need dealers to buy cars so the company can begin generating revenue.

GMAC Waiting to Issue Debt

Story from the Wall Street Journal

More than three months after turning itself into a bank, GMAC LLC is still waiting for the green light from regulators to issue debt crucial to its funding plan.

GMAC, the former financing arm of General Motors Corp., is seeking the go-ahead from the Federal Deposit Insurance Corp. to sell cheaply priced debt insured by the FDIC as part of the Temporary Liquidity Guarantee Program.

This program has allowed an array of financial institutions, ranging from Citigroup Inc. to General Electric Co.'s General Electric Capital Corp., to raise financing when they were otherwise shut out from repaying or refinancing debt as a result of the credit crisis. Qualifying financial firms have so far raised $238.2 billion of government-backed bonds or surety bonds since this program was announced in October, according to data provider Dealogic.

GMAC has $30.6 billion of debt maturing in 2009, including $11.8 billion of unsecured debt. Gaining access to cheap capital through TLGP was a major driving force behind the cash-strapped lender's bank registration in December.

"Despite becoming a bank, GMAC is squeezed for capital," says Mark Wasden, an analyst at Moody's Investors Service. GMAC unsecured debt is rated the lowest of 19 credit rankings by Moody's, just a step up from default. Moody's outlook on this rating suggests it could be bumped up.

The ability to issue FDIC-backed debt would "represent real liquidity. GMAC needs that today," Mr. Wasden says. The lender could raise as much as $12 billion through the TLGP, according to Moody's initial estimates using FDIC guidelines. "It's a potentially sizable amount," Mr. Wasden says. The amount GMAC may issue could differ based on the FDIC's decision.

"We have an application pending with the FDIC," says Gina Proia, a GMAC spokeswoman. "We are in the process of responding to requests for additional information."

An FDIC spokeswoman said GMAC's application "is currently under review," while declining to comment on specific details.

To be sure, GMAC does have access to other forms of federal funding: It got $5 billion under the U.S. Treasury's Troubled Asset Relief Program. GMAC Bank, as of the end of 2008, had used up $10 million of a $4 billion credit line from the Federal Reserve. The lender also is exploring ways to tap the government's Term Asset-Backed Securities Loan Facility, or TALF, aimed at reviving lending to consumers.

In addition, deposits at GMAC Bank grew by one-third, to $19.2 billion, as of Dec. 31, 2008, compared with a year earlier. The lender also shored up its capital base through a $38 billion debt exchange in November.

But concerns persist around GMAC's finances because of continuing potential losses at its auto-finance and mortgage units; its hefty debt burden; restrictions on its lending practices because of its new status as a bank; and debt and capital levels the lender must comply with as a bank.

GMAC is jointly owned by GM and an investor group led by private-equity firm Cerberus Capital Management LP. The auto maker and the investor group will significantly scale back their ownership in GMAC as a condition of the lender becoming a bank-holding company.