Why Bother Becoming a Bank?

Last week the Federal Reserve Board gave GMAC, the mostly spun-off financial arm of General Motors, permission to become a bank. According to The New York Times, that change "will allow GMAC to tap as much as $6 billion in government bailout money"—i.e., "funds from the $700 billion financial rescue package," a.k.a. the Troubled Asset Relief Program (TARP). Today the Times reports that GMAC, which loans money to car dealers and buyers, is trying to satisfy the conditions for its transformation into a bank. Among other things, it has to convert 75 percent of its debt into equity and shrink the share of the company owned by G.M. from 49 percent to less than 10 percent. The Times again notes that the main point of becoming a bank is to "gain access to billions of dollars in government aid," including "as much as $6 billion" from TARP. Under the Emergency Economic Stabilization Act (PDF), a business can receive TARP money only if it is a "financial institution," such as "a bank, savings association, credit union, security broker or dealer, or insurance company."

Question: Why is GMAC going to all this trouble when G.M. itself, along with Chrysler, somehow qualified as a financial institution, thereby allowing the Bush administration to unilaterally lend it money? If carmakers count as financial institutions, pretty much any business does, so why bother taking the steps necessary to become a bank? Since the Bush administration has shown time and time again that it is prepared to ignore the law when complying with it is inconvenient, why pretend that the law actually matters?