Wall Street Gapes at AmeriCredit Wreck

Updated from Sept. 16

A 30% selloff Tuesday morning left investors standing agape over the wreckage of auto lender AmeriCredit (ACF Quote).

The Fort Worth, Texas, lender to people with poor credit histories has been grappling with rising loan defaults over the past year. But credit problems appear to have gotten so bad that the once fast-growing company wants to take drastic measures to shore up its liquidity.

The question now is whether investors will go along. After the close Monday, the company announced plans to issue as much as $575 million of stock. That slug of shares is equivalent to half of the company's market worth at Monday's closing price of $13.62. But with the stock plunging to $9 Tuesday morning, the market is signaling it isn't sure that the new cash will be enough to sustain what is clearly a flagging operation. ...