GMAC, Ford Get Access to Commercial Paper Plan

Ford Motor's finance arm said Wednesday that it can access the Federal Reserve's new short-term funding facility.

"We have registered for the commercial paper program and it is available for us to use if we choose," Ford Motor credit spokeswoman Meredith Libbey said in a statement. She declined to provide details pending release of its third-quarter financial results on Nov. 7.

The Fed earlier this month said it would fund purchases of highly-rated, U.S.-dollar denominated, three-month commercial paper from U.S. issuers.

The facility was announced as a means to boost the availability of credit for companies and households.

GMAC, the auto finance and mortgage company, said Tuesday that it has been granted approval by the Fed to use the commercial paper funding facility.

The captive arms of Detroit automakers, once a good source of profits, have been hit by heavy losses and are now scrambling to conserve cash amid the current credit crisis.

Ford Credit reported a pretax loss of $294 million in the second quarter, compared with a profit of $112 million a year ago.

GMAC, meanwhile, lost $2.48 billion in the April-June period and has posted losses for four consecutive quarters.

Detroit-based GMAC is 51-percent owned by Cerberus Capital Management and 49-percent owned by General Motors . The company has been pulling back from auto financing in both North America and Europe in recent weeks, citing the difficult credit markets. On Tuesday, it said it would stop making new consumer car loans in seven European countries.

Approval to use the Fed funding facility comes at a time when U.S. automakers and their affiliated finance companies are asking for a range of government assistance, including the purchase of bad auto loans through the $700 billion program asset-purchase program controlled by the U.S. Treasury.

Cerberus, which owns Chrysler, also has been talking to GM about a merger of the two auto companies, according to people familiar with those discussions.

GM has asked the government for $10 billion in capital and other assistance to support that proposed merger, people with direct knowledge of the talks said.

GMAC plans to participate in the Fed's borrowing window through its New Center Asset Trust, a $10 billion asset-backed commercial paper facility. Cerberus purchased its stake in GMAC in 2006 from GM. The company lost $2.48 billion in the April-June period and has posted losses for four consecutive quarters.

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