GMAC May Ask for $6 Billion in TARP FundsGMAC's approval last week to become a bank holding company may lead to the automobile finance company asking for as much as $6 billion in TARP funds from the Treasury. It may also sell up to $17.5 billion in government-backed debt to meet credit obligations. The bonds would be backed by the Federal Deposit Insurance Corp. under the Temporary Liquidity Guarantee Program, says Creditsights, a research firm.
GMAC, which makes auto loans for GM car buyers, has lost $7.9 billion in the last five quarters.
Wall Street Ends Slightly Higher
On Friday, stocks closed slightly higher for the second session in a row on investor response to early holiday sales figures. Dow Jones industrial average was up 0.5 percent, Standard & Poor's 500 was also up 0.8 percent, while Nasdaq's composite was down 0.3 percent.
Trading was slow in the holiday week with many investors on vacation and many already closing their books on 2008. Poor retail sales are a concern to investors, as the holiday season is when most retailers earn the majority of their income. Retail sales make up two-thirds of the country's overall economic activity. A post-holiday report on shopping shows sales down as much as 4 percent compared to 2007.
Monday trading in Asia and Europe was up slightly on commodities trading. U.S. futures show hints of a higher opening on Wall Street. The Dow Jones industrial average futures was up 0.45 percent and Standard & Poor's 500 index futures was up 0.38 percent.
IndyMac Bank Nears Sale
Positive news for failed bank IndyMac comes as a group of three investors are near to completing a deal to buy the bank. The investors, J.C. Flowers & Co., Dune Capital Management and Paulson & Co. would buy the bank and its 33 branches, its reverse-mortgage unit and a $176 billion loan-serving portfolio, according to sources near the deal.
The FDIC last month announced it was expanding the pool of qualified bidders to include companies that do not have a bank charter. Investors must be approved by the responsible agency before a sale can be finalized.
IndyMac specialized in mortgages, including Alt-A type mortgages. It was taken over by federal regulators on July 11 in one of the biggest bank failures in U.S. history. At the time of takeover by the FDIC, it had $32 billion in assets and $19 billion in deposits. The FDIC's seizure of the bank came after 11 business days saw depositors withdraw $1.3 billion of deposits after comments by U.S. Senator Charles Schumer's questions about the bank's survival. The estimated cost to the FDIC of the IndyMac failure is $8.9 billion. Deutsche Bank and Barclays Capital are advisors to the FDIC during the sale.