GMAC Files to be Bank Holding Co.

On Thursday, GMAC Financial Services, the GM finance arm, applied to the Federal Reserve to become a bank holding company, allowing it to be eligible for aid under the Treasury's $700 billion bank rescue plan. The Treasury has so far invested $158.5 billion under the Troubled Asset Relief Program (TARP) in 23 banks in an effort to stabilize the financial services industry. GMAC did not say how much money it would seek, but says the money received would stay at GMAC for its business operations and would not be given to GM.

Dow Sinks; Fed Weighs Rate Cut

With the Dow Industrial Average dipping below 8,000 points for the first time since 2003 on Wednesday, and unemployment filings surging to more than 540,000 in the last week -- the highest in 16 years -- the Federal Reserve announced sharply lowered projections for economic activity through the next year.

This move by the Fed also signals a possible interest rate reduction will be announced at its next meeting on December 16. The Fed lowered rates to 1 percent, a point only seen once before in the last 50 years. Economists are predicting that the Fed will again lower rates, possibly even to zero to help buoy the floundering economy.

Big Three Await Help

The bad news from Wall Street was echoed in the answer from lawmakers to the Big Three automakers' pleas for bailout money. Investors are anxious, fearing the recession may be pushed out further if legislators aren't able to help the troubled auto industry. The financial crisis has already wiped out $6.69 trillion of value from investor portfolios in the S&P 500 since its high in October 2007.

Citigroup Gets Big Investor Push

On Thursday the long time investor and its largest shareholder, Saudi Prince Alwaleed Bin Talal, increased his stake in the banking giant Citigroup from 4 to 5 percent. Bin Talal's move comes after the government's $25 billion bailout for the troubled bank. The news of the increase did not lift the bank's stock price or affect the broader market, as the Dow was down 160 points in the first minutes of trading on Thursday.

About the Author

Linda McGlasson

Linda McGlasson

Managing Editor

Linda McGlasson is a seasoned writer and editor with 20 years of experience in writing for corporations, business publications and newspapers. She has worked in the Financial Services industry for more than 12 years. Most recently Linda headed information security awareness and training and the Computer Incident Response Team for Securities Industry Automation Corporation (SIAC), a subsidiary of the NYSE Group (NYX). As part of her role she developed infosec policy, developed new awareness testing and led the company's incident response team. In the last two years she's been involved with the Financial Services Information Sharing Analysis Center (FS-ISAC), editing its quarterly member newsletter and identifying speakers for member meetings.

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