GMAC Files to Become a Bank; Unemployment Nears 26-Year High; Mogul Signals Interest in Circuit City; Banco do Brasil Buying Out Rival; Crude Continues Slide; JPMorgan Cuts 3,000 jobs; Stock Market Craters;
Detroit-based finance company GMAC has filed to become a bank, a shot at getting a slice of the $700 billion Troubled Asset Relief Program bailout. Private equity firm Cerberus Capital Management LPowns 51% of GMAC. General Motors Corp. (GM) owns the other 49%, Reuters reported.
Initial jobless claims climbed to 542,000 in the week ended Nov. 15, close to a 26-year high. “The economic contraction appears to be worsening,” Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, told Bloomberg. “The stock markets are plunging, people are retrenching and manufacturing activity is virtually falling off a cliff. The increase in layoffs can only worsen the economic downturn.”
Ricardo Salinas Pliego, a Mexican media and retail mogul, indicated that he may seek a controlling stake in Circuit City Stores Inc. (CCTYQ), Reuters reported. Pliego already has a 28.1% stake in the company, which filed for Chapter 11 bankruptcy protect last week.
After seven months of negotiations, Banco do Brasil SA, Brazil’s largest government-owned bank, is buying majority control of Banco Nossa Caixa SA for $2.25 billion, “Nossa Caixa has got plenty of liquidity, a decent branch network and judicial deposits of Sao Paulo state which is useful. It's a good fit and it's a good asset,” Pedro Fonseca, an analyst at London’s Keefe, Bruyette & Woods Ltd., told Bloomberg.
Light, sweet crude for December delivery fell nearly 8%, or $4.07, to $49.50 a barrel in afternoon trading on the New York Mercantile Exchange, before settling at $49.65 a barrel.
JPMorgan Chase & Co. (JPM) the largest U.S. bank, plans to fire about 10% of its investment banking staff, or about 3,000 employees, as the global economy slides into recession, Bloomberg News reported. JPMorgan also plans to freeze base salaries next year for most employees who earn more than $60,000 to $70,000, annually.
The Dow Jones Industrial Average yesterday (Thursday) shed 445 points, or 5.6%, to close at 7,552.29 – its lowest level since March 12, 2003. Meanwhile, the Standard & Poor’s 500 index lost 54 points, or 6.7%, to close the day at 752.44 – its lowest level since 1997.