updated 12/24/2008 4:41:12 PM ET 2008-12-24T21:41:12

The Federal Reserve has granted a request by the financing arm of General Motors to become a bank holding company, allowing it to petition for money from the government's $700 billion rescue program.

As a bank holding company, GMAC Financial Services will also be able to get emergency loans directly from the Federal Reserve. Without backing, GMAC could have been forced into bankruptcy protection.

The Fed said it had determined that emergency conditions existed because of the crisis in the financial system.

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.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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