NEW YORK (Reuters) – Wall Street was set for a sharply lower open on Monday as the Obama administration raised the specter of bankruptcy for two major U.S. automakers and Spain had to rescue regional savings bank CCM.
The administration grabbed control of the failing U.S. auto industry on Monday, forcing out General Motors Corp's (GM.N) CEO, pushing Chrysler LLC toward a merger and threatening bankruptcy for both.
GM shares tumbled more than 20 percent in pre-market trade while Ford (F.N) shed 3.5 percent to $2.74.
"The worst part about this is anyone else who may need government assistance or help realizes that they are in for it; the government will put a heavy hand and tell you what to do," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.
"And when government gets involved, most of the time, it's inefficient."
European markets fell after Spain was forced into its first bank rescue since the financial crisis began and Germany and Britain also acted to shore up lenders as the sector awaited the brunt of the impact of rising bad loans.
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