Auto Winners & Losers: GM

Updated from 10:40 a.m. EST

DETROIT -- Shares of General Motors (GM Quote) and Ford (F Quote) spiked Friday after the government agreed to offer aid to GM's financing arm.

GM shares rose 12.6% to $3.66 in the first trading session since the Federal Reserve granted bank holding status to GMAC Financial Services late Wednesday.

The move, which makes GMAC eligible for funds earmarked for the government's $700 billion bank rescue plan, saves GMAC from possible bankruptcy. It also is expected to stimulate activity in the auto sector, since the funds would allow GMAC to offer loans to car buyers and dealerships looking to increase showroom inventories.

GMAC, which is owned by Cerberus Capital Management and GM, had been trying to talk its bondholders into swapping their debt for new equity in order to generate the regulatory capital necessary to become a bank holding company. But just a few days before its Dec. 26 deadline, GMAC was still struggling to convince investors to provide the capital it desperately needed.

The Federal Reserve stepped in Wednesday, citing "emergency conditions" to justify its decision. It said the plan will "benefit the public by strengthening GMAC's ability to fund the purchases of vehicles manufactured by GM and other companies and by helping to normalize the credit markets for such purchases." The move came just a few days after the White House threw GM and Chrysler a $17.4 billion emergency lifeline.

GMAC spokeswoman Gina Proia said that GMAC has submitted an application to the Treasury Department for undisclosed government rescue funds. Meanwhile, GMAC's debt swap deadline still stands; the lender will disclose the results of the exchange after it expires, Proia said.