ResCap Worries Dent GM

The financial squeeze at home-lending giant Countrywide Financial (CFC Quote) bled into shares of General Motors (GM Quote) on Thursday as investors scrambled to gauge the automaker's remaining exposure to its financing firm's mortgage arm, Residential Capital.

Countrywide, the nation's largest mortgage lender, drew down an entire $11.5 billion line of credit to boost its cash position amid a global credit crunch. Rating agencies Moody's Investors Service and Fitch Ratings responded by downgrading its credit rating, and they also reduced ratings on Residential Capital, or ResCap, to junk status, citing funding and valuation volatility in the single-family mortgage market.

GM sold a majority stake in its finance arm, GMAC, to private-equity maven Cerberus Capital Management last year, so its remaining exposure to ResCap, GMAC's residential mortgage subsidiary, is limited. Still, shares of GM slid as much as 7.1% Thursday before rallying along with the broader market to close down 87 cents, or 2.8%, to $30.67. ...