DETROIT (Reuters) - GMAC, the auto finance and mortgage company, is seeking to become a bank holding company in order to access the government's $700 billion financial rescue plan, the Wall Street Journal reported on Tuesday.

GMAC spokesman Gina Proia said the finance company had no comment on the report.

Cerberus Capital Management, the private equity firm that also controls Chrysler LLC, has been discussing the matter with the U.S. Federal Reserve for over a month, the newspaper reported, quoting unnamed people familiar with the talks.

As a bank holding company, GMAC could receive equity injections from Treasury Department and sharply reduce its borrowing costs in part by gaining access to the Fed's discount window.

Proia said earlier on Tuesday that GMAC LLC had been granted approval by the Fed to use a commercial paper funding facility created earlier by this month by the central bank.

Cerberus and General Motors Corp <GM.N> have been discussing a merger deal for Chrysler since September, according to people familiar with the talks.

The Wall Street Journal said that those talks were being structured so that both GM and Cerberus could benefit from the financial support being offered by the Treasury Department and the Federal Reserve.

The newspaper said that while the mechanics of a bank registration would be complex for GMAC it might include a requirement that GM's stake in GMAC be no more than 24.9 percent.

Cerberus owns 51 percent of GMAC. GM owns the remainder. In addition to a merger of GM and Chrysler's struggling auto operations, the two sides have also discussed a transfer of some of GM's stake in GMAC to Cerberus, people with knowledge of the talks have said.

The newspaper said that one idea being discussed would merge Chrysler Financial into the entity controlled by the bank holding company in order to create a financial services company that would offer services including auto loans, interest bearing accounts and credit cards.

GM and Chrysler have declined to comment since word of their merger talks broke earlier this month.

(Reporting by Kevin Krolicki; Editing by Gary Hill)