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 boosts the prospects of General Motors after the US government last week approved a $13.4 billion rescue loan package for GM and Chrysler to stave off collapse amid tight credit and dismal sales. GMAC faced possible bankruptcy, jeopardising financing for GM car dealers and customers, and its demise could have dragged down the Detroit automaker's fortunes with it. GM and Cerberus Capital Management must reduce their ownership stakes in GMAC.
