Ezra Merkin, the manager of a major Bernard Madoff "feeder fund," resigned effective Friday from his post as chairman of GMAC Financial Services, the financing arm of General Motors .
Within and without GMAC, pressure had grown on Merkin to step down since he was connected to the Bernard Madoff scandal, CNBC has learned. Merkin ran one of the funds that handed money over to Madoff, who is alleged to have run a $50 billion ponzi scheme that has ruined many investors.
At least one entity that is believed to have lost millions as a result of the Madoff scandal, New York University, has said it was unaware that Merkin was investing its money with Madoff.
GMAC put out a press release pointing out that Merkin's resignation is in accordance with an order from the U.S. Federal Reserve System's Board of Govenors granting GMAC's application to become a bank holding company. The order lets GMAC participate in the U.S. Department of the Treasury's Troubled Asset Relief Program.
"I am pleased that GMAC has successfully completed its conversion to a bank holding company and look forward to GMAC's accomplishing its goals," Merkin said.
Lenard Tessler, managing director and co-head of private equity at Cerberus Capital Management will replace Merkin during transition to the new board, which must be reconstituted no later than March 24 per Fed order.
The vacant board seat will be filled by Jeffrey L. Lomasky, chief financial officer of Cerberus.
GMAC's new seven-member board will consist of the GMAC chief executive officer, one representative from FIM Holdings, two directors appointed by a trust to be formed by U.S. Department of the Treasury, and three independent directors elected by the aforementioned directors.