Ford and GM get US permission to set up banking units

Ford and General Motors have received federal approval to establish banking units, enabling them to offer better loan terms amid rising vehicle affordability concerns. The FDIC authorized Ford Credit Bank and GM Financial Bank, both chartered in Utah, to provide automotive financing by purchasing retail contracts from Ford dealers.

These banks will accept FDIC-insured deposits, allowing access to cheaper funds. Regulatory challenges previously hindered Ford and GM’s banking ambitions. Critics warn that these industrial banks may take excessive risks to boost sales, echoing past issues faced by GMAC during the 2008 financial crisis.

Recent car loan delinquencies have reached concerning levels, reflecting a trend similar to the Great Financial Crisis.