In February 2021, General Motors filed to trademark GM Financial Bank, indicating plans to expand its captive finance arm, GM Financial (GMF), into more traditional banking services. However, by the summer of 2024, General Motors withdrew its application to create GM Financial Bank “to address feedback provided by the FDIC.”
Now that there’s a new sheriff in town in Washington, D.C., GM has already filed a new application with the Federal Deposit Insurance Corp. (FDIC) to start its own bank in late January, according to The Detroit News. Stellantis made a similar request around the same time, and Ford already had a pending application.
A bank run by a business that isn’t a financial firm is called an industrial bank. These banks are chartered by states and require FDIC approval to operate. The Biden administration was reluctant to accept new applications for industrial banks, but the Big Three Detroit automakers are hoping new leadership in Washington will be more favorable to their would-be financial institutions.
A GM spokesman declined to comment beyond a January press release that said the proposed bank “will focus on auto lending and deposits, complementing the company’s core business capabilities to drive value for our customers and dealers.” GM’s current FDIC application says its bank would focus “solely on auto lending.”
Members of Congress have predictably mixed opinions on a looser regulatory environment for industrial banks. “If the FDIC faithfully applies the law, these applications will be denied, and taxpayers will avoid future 11-figure bailouts of big corporations,” said Sen. Elizabeth Warren (D-Massachusetts). Sen. Tim Scott (R-South Carolina) said Congress shouldn’t weigh in on banking applications, but the FDIC should evaluate them “in a timely manner.”
“The specific details of the agency’s supervisory history with the banks owned by GM remains confidential, but it raised a host of concerns,” Rohit Chopra, the former head of the Consumer Financial Protection Bureau who also served on the FDIC board, told The Detroit News.
Comments
Before trying to become a bank, first try to build trouble free vehicles
Rolling in dough, why not spend a ton frivolously? With a recession knocking on the doors, more GM brilliance.
Until recently, I held a lot of GM stock. I’m ready to jump back in when warranted.
That said, GM, and dealers, and now GM Financial, make a strategic decision when they create avenues for “nickel and diming” their customers. It’s bad for GM. GM Financial is just another means for GM and GM dealers to take money from customers. Make and sell good cars at a good price. Stop ripping off customers with ancillary products and practices. GM Financial will provide a “service” to customers, but the service reminds me of the “service” a bull provides a cow….
I love GM Financial. I got a 6 year 0% finance loan for a new SUV. No problems. No fuss.
Why not Ask Toyota if they build a Trouble Free Vehicle. The new Tundra and Tacoma are horrible. Massive engine and transmission failures. 10s of thous sitting on dealer lots.
A few months ago, Toyota discovered that some of their engines had been made with some shavings left over in in the engines from the manufacturing process. Toyota took ownership of the problem and decided to REPLACE the engines free of charge.
As a 28 year GM employee went through the bankruptcy, Plant closing, stock loss, dislocated relocated… I call bullshit. I would not finance my dog house through GM nor will I ever Own another GM vehicle. Especially when I see the same things happening now. As I did prior to bankruptcy 2008… Same show different actors.
When GM makes butter reliable and ICE cars I will consider GM banking .
Maybe you should invest in a remedial spelling / grammar app first…
The way the economic winds are trending, I really wouldn’t advise getting into lending right now ESPECIALLY auto lending. See GMA’s own nearby article about auto loan delinquencies being the highest since they started tracking in 1994.
Might not be bad market to enter after 2008 repeats itself, but let someone else deal with the current situation.
With President Musk looking to kill off the consumer finance protection bureau, I’m sure this will be great for GM consumers. /s