By Richard C. Gross
General Motors could file for bankruptcy. The Nasdaq Composite Index fell through the 1,300-point level.
All three of the major indexes tumbled at least 4 percent. The benchmark Standard & Poor's 500 again dropped below 700 points - its lowest point since September 1996 - and the Dow Jones Industrial Average fell through the 6,600-point mark, its lowest close since April 1997. The bottom was anyone's guess.
At the close, the Dow plunged 281.40, or 4.09 percent, to 6,594.44. The tech-laden Nasdaq plummeted 54.15, or 4 percent, to 1,299.59, its lowest point since Nov. 21, CNBC said. The S&P 500 sank 30.32, or 4.25 percent, to 682.55.
"There's too much uncertainty," Standard & Poor's told CNBC.
Bank stocks led the way down, with Bank of America declining by more than 10 percent to close at $3.21.
Shares of Citigroup, valued at $270 billion about two years ago, at one point during the day sank more than 10 percent to less than $1 for the first time, the bank's solvency in question because of toxic assets. It ended the day at $1.02 a share.
"The economy continues to deteriorate," The Washington Times. "The possibility that GM might have to declare bankruptcy only adds more fuel to the fire. These are truly dark days for the recessionary cycle."
GM's accounting firm of Deloitte & Touche LLP raised the prospect of the possible bankruptcy of the giant automaker, until last year the world's No. 1 vehicle manufacturer, in the firm's annual report. It said there was "substantial doubt" the debt-ridden firm could continue operations.
GM shares fell 15.45 percent to close at $1.86.
The federal government has lent GM $13.4 billion, and the company is seeking another $30 billion during the worst downturn for the auto industry since the early 1980s, when the country was in recession. The company has amassed $82 billion in losses during the past three years, including $30.9 billion last year.
GM said in its report that the viability plan it submitted to the government last month in order to qualify for the loan must succeed if it is to remain alive.
"If we fail to do so for any reason, we would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the U.S. Bankruptcy Code," the firm said.
The markets resumed their slide, now in its fourth consecutive week, despite a rally Wednesday that pushed the Dow up nearly 150 points, spurred by hopes that industrial powerhouse China would come through with a stimulus package. It was not to be, as China revealed no new stimulus incentives.
On the housing front, the Mortgage Bankers Association reported that a record 5.4 million homeowners, about 12 percent, were at least a month behind in their payments or in foreclosure at the close of 2008. It marked an increase of 2 percent from the end of the third quarter and 4 percent from the end of 2007.
Fully 48 percent of those who have subprime or adjustable-rate mortgages are behind in payments or in foreclosure, the association said.
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