WASHINGTON — As the Federal Reserve Board weighs whether GMAC Financial Services may become a bank holding company, observers are asking if the central bank is overextending itself.

The Fed has already agreed to assume oversight of Goldman Sachs and Morgan Stanley, guarantee $29 billion of Bear Stearns assets, lend to American International Group, backstop the money market mutual fund industry, and buy unlimited amounts of commercial paper.

Several observers questioned the wisdom — and the Fed's capacity — if it also starts overseeing automakers, and wondered about the precedents of such an arrangement.

"There's no question they will be stretched," said Robert Clarke, a former comptroller of the currency and a senior partner at Bracewell & Giuliani LLP. "The financial regulators are going to be challenged in this period of time like they've never been before."

Observers also raised concerns about other troubled companies that fall outside the traditional sphere of financial services that could soon be knocking at the Fed's door soon.

Marc Franson, a partner at Chapman and Cutler LLP, said there is a growing sense that the Fed is overreaching.

"They only have a limited degree of resources, and as they take on additional work, that's going to tax those existing resources," he said. "Where's this going to go? Every commercial company with an industrial bank may be seeking the same thing as GM."

"The list is a large one, including GE, Pitney Bowes, Target," Mr. Franson continued. "If they wanted to, there's a potential stampede to become bank holding companies."

It is unclear how the Fed will rule on a GMAC application. General Motors Corp., which owns 49% of GMAC, is exploring a merger with Chrysler and has sought government assistance to help finalize a deal. As part of such a deal, GMAC would convert to a bank holding company.

The Fed, whose policymaking committee met Tuesday and Wednesday, has not approved a bank holding company application from GMAC. A spokeswoman for the finance arm of GM would only say "we continue to explore a number of possibilities."

"There's been a lot of activity in the world around us," she said. "This is an environment where no two days are alike."

Under Fed rules, any firm that owns more than 24.9% of a bank must register as a bank holding company and submit to supervision from the central bank. The rules were recently revised to let investors hold as much as a third of a bank's stock, though voting shares are capped at 15%.

If GMAC ultimately wins approval to become a bank holding company, GM would have to reduce its stake in the company. But, in exchange, the finance arm would get access to the Fed's discount window and could benefit from the perception of stronger oversight from the central bank.

Some wonder whether that is an appropriate role for the central bank to play. "There are questions about whether the Fed should indirectly facilitate the merger of two automakers," said Mark Flannery, a professor of finance at the University of Florida. "It does seem to me that the automakers have shown for years they can't compete effectively. It strikes me as a bad policy decision to use government money to help them out of the position they've gotten themselves into."

Matters could be further complicated by the fact that many of the Fed's recent actions, such as its decision to buy commercial paper from virtually any issuer, is taking it further away from the institutions it has traditionally supervised — state member banks and bank holding companies. That could create a knowledge gap, observers said.

"It's one thing when someone like PNC files an application to acquire National City," said Ron Glancz, a partner at Venable, Baetjer, Howard & Civiletti LLP. "That's a holding company that's examined every year or two. But for a company that hasn't been examined by the Fed, it's difficult."

Perhaps the overriding concern is that approval of GMAC's bid could amount to a perversion of the bank holding company charter. The charter, observers said, was never meant to serve as a safe haven for companies that find themselves in trouble.

"Can you imagine what the drafters of that legislation would have thought if they saw today that Goldman Sachs is a financial holding company or GMAC had applied?" Mr. Glancz asked.

Prof. Flannery agreed that the financial system has evolved very quickly as firms which have long worked to avoid Fed oversight are now finding the bank holding company charter attractive.

"It's certainly a very striking deviation from the way people acted in the past," he said. "It seemed that on net it was a perceived burden to be a bank holding company. Now we see there are deep pockets."

In addition to access to the discount window, GMAC may be seeking bank holding company status because Fed supervision reassures investors who are concerned about the health and viability of several companies.

But once stability returns, some said the newly converted bank holding companies may experience buyer's remorse.

The holding companies could try to sell their banks and end their charter with the Fed, but, Mr. Clarke said, it might be difficult to find a willing buyer after the financial crisis passes.

"It's hard to undo being a bank holding company once you become one," Mr. Clarke said. "It's not that easy to get rid of the attributes that cause you to be a bank holding company."

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