GMAC Bailout Pushes Dow Up at Opening
The government's $5 billion boost to GMAC seems to have pushed the markets to a slightly upward opening.
In the first 25 minutes of trading, the Dow is up about 47 points, or about 0.6 percent.
The S&P 500 and the Nasdaq are both up slightly less than 1 percent.
GMAC is the financing arm of GM. It is owned by GM and Cerberus Capital, the leveraged buyout firm that bought 80 percent of Chrysler from Daimler in 2007. GM has 49 percent of GMAC; Cerberus has the rest.
In order to stay in business -- no one wants/has been able to get a decent auto loan these days -- GMAC applied with the federal government to become a bank holding company, just like Goldman Sachs and other former investment banks.
As a bank holding company, GMAC would be eligible for some of the government's $700 billion in buyout/rescue funds, $5 billion of which was approved yesterday.
What does this mean for you? Something pretty significant, actually.
This morning, GMAC announced -- thanks to the government bailout -- that it would start giving auto loans again to customers who have a credit score of at least 621.
Two months ago, GMAC raised the bar to 700 -- excluding about 42 percent of all U.S. consumers.
Analysts predicted that GMAC would have been forced to file for bankruptcy without the government help.
December 30, 2008; 9:56 AM ET
Categories: The Ticker | Tags: Dow Jones, GM, GMAC
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