Federal regulators will permit the financing arm of General Motors to become a bank and gain access to billions of dollars in government aid, a crucial step that will help ensure the survival of the company.
In a 4 to 1 vote, the Federal Reserve Board approved GMAC’s application to transform itself into a bank holding company “in light of the unusual and exigent circumstances” affecting the financial markets. The move will allow GMAC to tap as much as $6 billion in government bailout money. The approval came as GMAC bondholders were facing a Friday deadline to vote to approve a complex transaction that would significantly reduce the company’s outstanding debt.

As of Dec. 17, bondholders had agreed to convert less than 60 percent of their debt into preferred shares. Some big bondholders like the investment firm Pimco have said they do not intend to exchange bonds unless Cerberus Capital Management — the private equity firm that owns 51 percent of GMAC — puts more money into the company.

GMAC has been hit with huge losses in both its mortgage and auto loan businesses. The approval from federal regulators may help persuade remaining bondholders and should make it easier for the company to raise money. It should also help General Motors, which owns a minority stake in GMAC and depends on the firm to finance some of its cars.

The Fed’s decision comes days after the Bush administration said it would tap the bailout fund to provide emergency loans to General Motors and Chrysler to buy them time to reorganize and avoid having to file for bankruptcy protection. Now G.M. is seeking longer-term support from the incoming Obama administration.

Cerberus will be forced to cut its stake in the new bank holding company and become a passive investor. The change would very likely also scuttle Cerberus’s plans to merge Chrysler Finance, another auto-lending business it controls, into GMAC.

A Cerberus spokesman declined to comment.

The Fed’s decision was at least the sixth time in the last few months that it has moved quickly to let nonbank lenders, which rely on credit markets for funds, become bank holding companies. This week, it granted the CIT Group, a lender to midsize and small businesses, a similar charter. The credit card lenders American Express and Discover Financial, and the investment banks Goldman Sachs and Morgan Stanley, also became bank holding companies this fall.

But the Fed’s decision to approve GMAC is particularly controversial. One Fed governor, Elizabeth A. Duke, cast a dissenting vote. Ms. Duke, a former commercial banker and the first woman to head the American Bankers Association, joined the board of the Fed in August.

GMAC has to make several changes to its structure to alleviate concerns. Critics had raised questions about GMAC’s financial strength, its ownership by a private equity firm and whether it was involved in too many commercial activities to become a bank.

The Fed, which had been considering the proposal since early November, determined that “emergency conditions” made it imperative that it act quickly.

Regulators also wanted to approve GMAC’s application to become a bank so that it could apply for federal funds before a year-end deadline set by the Treasury Department. “GMAC will be well capitalized on completion of the proposal,” the Fed said in a public notice.

As a condition of the Federal Reserve’s approval, General Motors will have to reduce its ownership stake in GMAC to less than 10 percent, from 49 percent. An independent trustee, whose appointment will be approved by the Fed and Treasury, will sell the company’s stake within the next three years.

Cerberus, which currently has a controlling stake, will reduce its ownership stake by distributing its interest in the company to its investors. That will leave Cerberus with less than 14.9 percent of the voting shares in GMAC and 33 percent of the total equity in the firm. No individual investors will control more than 5 percent of the voting interest in GMAC or 7.5 percent of the firm.

Cerberus will also stop providing consulting services to GMAC, and the two entities will no longer be able to share executives. GMAC will also have to appoint new independent directors to its board to replace members who are affiliated with G.M. or Cerberus.

GMAC has not announced any changes to its business model. But as a bank, the lender will have greater access to more stable deposits and access to loans from the Fed. Based upon a formula used by the Treasury, the company could receive as much as $6 billion in funds from the $700 billion financial rescue package.

But the company will also be subject to more stringent federal oversight and will have to diversify its business beyond loans to car buyers and dealerships.

In a statement, Alvaro G. de Molina, GMAC’s chief executive, called the Fed’s decision a “key turning point” in the company’s history and a “critically important” measure for the broader economy.

GMAC has been an integral part of General Motors since it was created in 1919. It provides financing to 75 percent of the 6,450 G.M. dealers and to many of the people who buy its cars, though it has had to scale back auto lending in recent months.

GMAC has faltered in the last few years. Its mortgage unit, Residential Capital, has suffered significant losses on home loans it made during the recent housing boom, and more recently it has become virtually impossible for GMAC to sell auto loans to investors. The company has lost $8 billion in the last two years.