U.S. Fed makes GM's financial arm a bank holding company

Special Report:Global Financial Crisis

WASHINGTON, Dec. 24 (Chinese media) -- The U.S. Federal Reserve announced Wednesday that it has granted a request by the financing arm of General Motors to become a bank holding company.

That means the GM's financial arm -- GMAC Financial Services has been allowed to petition for money from the government's 700 billion dollar financial rescue program.

As a bank holding company, GMAC Financial Services will also be able to get emergency loans directly from the Federal Reserve, which is the central bank of the United States.

Without backing, GMAC could have been forced into bankruptcy protection.

The Fed's decision comes five days after the Bush administration said it would tap the bailout fund to provide emergency loans to General Motors and Chrysler LLC to buy them time to reorganize and avoid having to file for bankruptcy.

On Dec. 19, U.S. President George W. Bush announced that the government will provide 13.4 billion dollars in short term loan to bailout the country's crippled auto industry from bankruptcy.

The 13.4 billion dollar loan, drawn from the 700 billion financial rescue fund, would be available this month and next, 9.4billion for General Motors Corp. and 4 billion for Chrysler LLC.

An additional 4.0 billion dollars will be available in February.

Of the country's biggest three automakers, General Motors Corp. and Chrysler LLC have warned they could be weeks from collapse, while Ford Motor Co. said it may not need the fund right now.