GMAC stays mum on debt swap

The financing arm of General Motors Corp. remained silent Monday on whether it had raised enough capital to become a bank-holding company and eligible for access to billions in federal bailout money.

Analysts have speculated that if GMAC (nyse: GJM - news - people ) Financial Services LLC doesn't obtain financial help it would have to file for bankruptcy protection or shut down, which would be a serious blow to parent GM's own chances for survival.

GMAC had received the Federal Reserve's approval to become a bank holding company last week, but the approval was contingent on the auto and home loan provider raising at least $30 billion in regulatory capital. The company had been attempting to raise the needed funds through a complicated debt-for-equity exchange that expired at 11:59 p.m. EST Friday.

In an e-mail Monday, GMAC spokeswoman Gina Proia said GMAC still had no news to announce regarding the debt swap. That came after Saturday e-mails that did not provide any specifics but said that GMAC planned to announce the results of the debt swap soon.

"The offer did expire yesterday at 11:59 p.m. as planned. We have not yet issued final results but intend to in the near term. I have no further comment on the exchange until then," Proia wrote Saturday.

Becoming a bank-holding company would both qualify GMAC to access the government's bank rescue funds and support GMAC loans to car buyers and GM dealerships. GM owns 49 percent of GMAC.

The Federal Reserve apparently needed to see that bondholders were willing to inject more capital into GMAC. The bondholders needed reassurance that the Fed would approve GMAC's application to qualify for federal aid.

If the financing company fails to become a bank holding company, it could mean severe consequences for automaker GM.

General Motors (nyse: GM - news - people )' ownership of GMAC has kept the finance arm lending to dealers and car buyers, even as credit from traditional banks has dried up. If GMAC goes under, other institutions aren't likely to step in to replace the credit lost by GM's dealers and customers.

The Fed's action Wednesday came as GMAC was struggling to get bondholders to convert 75 percent of their debt into equity of the company. It's been nearly two weeks since GMAC has released any information about the amount of participation so far.

As of Dec. 17, only about 16.9 billion, or 58 percent, of its GMAC notes had been tendered, along with about $3.5 billion, or 38 percent, of the notes issued by its Residential Capital LLC mortgage business.

GMAC's goal is to reach $30 billion in capital, the majority of which would come from the exchange of debt. Another part of the equity requirement included a demand from the Fed that $2 billion of the total come from new equity. So far, GMAC has received a commitment of $750 million from GM and private-equity firm Cerberus Capital Management, which owns the majority stake in GMAC.

It's unclear whether that funding would come from the $17.4 billion in bridge loans the U.S. Treasury granted GM and Chrysler LLC - which is owned by Cerberus_ earlier this month.

Some of the rescue money will be available this month and next - $9.4 billion for GM and $4 billion for Chrysler, which have said they could be facing bankruptcy soon without government help. GM is set to receive the remaining $4 billion in loans after more money is released from the financial rescue account.

It was unclear Monday exactly when the Treasury Department planned to release the first set of loans.

"We're making good progress finalizing the automaker loans and are committed to closing them on a timeline that will meet their individual near term funding needs," Treasury spokeswoman Brookly McLaughlin said in a statement.

GMAC has not said publicly how much it was requesting from the $700 billion bank bailout fund. CreditSights analyst Richard Hoffman estimated in a research note Friday that GMAC "could have applied for up to about $6.3 billion."

The Fed order says GM will reduce its stake to less than 10 percent of the voting and total equity interest of GMAC. GM's remaining equity interest in GMAC will be transferred to an independent government-accepted trustee who must dispose of the equity held in the trust within three years of the trust's creation.

Cerberus, which led an investment group that bought a 51 percent stake in GMAC from the automaker for $14 billion in 2006, will reduce its stake in GMAC to no more than 33 percent of total equity.

In afternoon trading, GM shares fell 27 cents, or 7.4 percent, to $3.39.

Associated Press Economics Writer Christopher S. Rugaber in Washington contributed to this report.

Federal prosecutors said flatly that there is no evidence of involvement by the president-elect in allegations that Blagojevich (D) attempted to sell Obama's vacant Senate seat to the highest bidder.

But the conspiracy allegedly dreamed up by Blagojevich was an unwelcome development in Obama's transition to power, threatening something Obama has avoided throughout his career -- the taint of Chicago politics.

Obama was nurtured politically in the city, rising while scandal swirled around him but remaining largely untouched as governors, lawmakers and lobbyists went to jail. For years, rivals -- including  Sen. John McCain and the GOP this year -- sought to tie him to Antoin "Tony" Rezko, a onetime friend and fundraiser who was convicted in June of fraud and bribery.

"This man has managed to dodge many a near-corruption bullet," said Richard Epstein, a University of Chicago law professor who has clashed with Obama in the past. "My hope is that he will be vindicated, as I think he will be."

By all accounts, Obama and Blagojevich are not close, though then-Sen. Obama endorsed his fellow Democrat's reelection bid in 2006.

"I had no contact with the governor or his office, and so I was not aware of what was happening," Obama told reporters as he emerged from a meeting with former vice president  Al Gore yesterday. "It is a sad day for Illinois. Beyond that, I don't think it's appropriate to comment."

In a television interview last month, David Axelrod, a longtime Chicago political consultant who served as Obama's campaign strategist and will accompany him to the White House, said Obama had spoken to the governor about the Senate vacancy. But yesterday Axelrod issued a statement saying he had been "mistaken."

"They did not then or at any time discuss the subject," he said.

But Obama was dragged at least tangentially into the scandal by virtue of repeated references to him in the 76-page indictment of Blagojevich. In one section, prosecutors described a deal the governor envisioned involving himself, a union and Obama.

In a two-hour telephone conversation recorded by federal agents, Blagojevich's chief of staff suggested that "SEIU could help the President-elect with Rod Blagojevich's appointment of Senate Candidate 1 to the vacant Senate seat, Rod Blagojevich would obtain a position as the National Director of the Change to Win campaign, and SEIU would get something favorable from the President-elect in the future." The SEIU is the Service Employees International Union.

"Senate Candidate 1" is apparently a reference to Valerie Jarrett, since "Candidate 1" is described as a woman who withdrew her name from consideration. A close Obama friend who was initially a leading candidate to take his place in the Senate, Jarrett took her name out of contention last month and was named a senior White House adviser.

How To Go Green And Stay Cost-Competitive

Even small businesses can do it. Here's how.

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The perception that it costs an arm and a leg to "go green" keeps plenty of small businesses (and customers) from even trying--let alone in a recession.

Sure, many eco-friendly improvements do require some initial capital. But they also can yield significant cost savings--and drive revenues--in the long run. According to a recent study of 1,146 Americans across the country by Ketchum, a Manhattan-based public relations firm, and Braun Research, a public opinion research firm based in Princeton, N.J., nearly half of all respondents said they make some effort to buy green products.

"The perception is that going green is for rich guys, but it's actually all about saving money and resources," says Charlie Szoraid, chief executive of efficiency consultancy GreenandSave in Wayne, Pa. Nor do green-related savings necessarily take years to kick in, he adds.

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Joe Nelesen buys that line. Last June, Nelesen, owner of a Culver's restaurant franchise in Appleton, Wis., started using leftover vegetable oil to fuel his Ford Excursion and two tractor mowers he uses at his other business, a golf course in the nearby town of Chilton. A machine made by Fryer To Fuel converts the oil into 40 gallons of fuel per week. Nelesen paid $8,000 for the converter but plans to make it up fast. He estimates he saves about $400 per week on diesel fuel and $100 per week in grease-removal costs at the restaurant.

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Think you're stressed? Try a day in the life of Rich Gelfond, co-chief executive of IMAX, the large-format film company.

Take Nov. 5, for instance. After his usual 6 a.m. stint at the gym, Gelfond joined his board of directors and audit committee for a two-hour meeting. From there, he headed to a three-hour meeting to finalize third-quarter financials to be announced the next day. In the afternoon, he wrote a script for the conference call and practiced fielding tough questions with his public relations team, all while battle-planning with film executives preparing to launch Madagascar: Escape 2 Africa in 35 newly outfitted digital-projection Regal theaters--IMAX's (nasdaq: IMAX - news - people ) biggest opening to date.

That's pressure. But you don't need to be a top executive like Gelfond to feel stressed out on the job. The American Institute of Stress estimates that stress costs U.S. corporations $300 billion annually in health care costs, turnover and absenteeism.

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How to cope? We spoke with psychologists and sports stars to find some helpful tactics--no heavy pharmaceuticals allowed. In calmer moments, much of this might seem like common sense. But if you think you've heard it all before, ask yourself: How often do you actually follow the advice?

In the short term, coping with stress is about finding release--or at least some semblance of it. When Gelfond is at his busiest--bouncing between meetings, grappling with the latest technology and dealing with investors--he makes sure he gets an hour in the gym before he starts his day. "Not only do [my workouts] help me to relieve existing stress, they increase my ability to deal with problems that arise throughout the day," he says.