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Worries About Banks And GM Pummel Stocks

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The Associated Press

Published: March 6, 2009

NEW YORK - Investors fled Wall Street again Thursday, driven by worries about the stability of the nation's big banks and General Motors Corp.

Stocks ended at 12-year lows, more than wiping out a one-day rally Wednesday. Investors wrestled with more disheartening economic data, new concerns about GM and ongoing uncertainty about the financial system. Short selling ahead of the government's Friday employment report exacerbated the losses, slashing 281 points from the Dow Jones industrials and sending all the major indexes down more than 4 percent.

Stocks fell in every industry, with the beleaguered banking sector posting some of the steepest losses. Citigroup Inc., still shaky despite receiving billions in government aid, sank below $1 at times and finished down 10 percent at $1.02. GM closed with a loss of 15 percent at $1.86, as it warned of possible bankruptcy.

GM also disclosed Thursday that its chief executive officer, Rick Wagoner, received a pay package worth $14.9 million in 2008, while his company lost $30.9 billion and is now relying on government loans to stay in business. But roughly $11.9 million of Wagoner's compensation was in stock and options that have plummeted to $682,000 in value.

The specter of a GM bankruptcy was raised Thursday by the automaker's own auditors, who said there was "substantial doubt" about GM's ability to continue operating.

Although the warning was not unexpected, the confirmation of that prospect threw yet another spotlight on the struggling automaker's dire position.

GM has said that without more government cash infusions, it will not be able to continue operations. It also has requested aid from other countries where it operates.

Information from the Los Angeles Times was used in this report.

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