By Justin Berkowitz
October 27, 2008
According to Karey Wutkowski at Reuters, the “The Treasury Department is considering aid of at least $5 billion, which could include direct capital injections and government purchases of auto loans.” The usual anonymous source claimed the decision could be made this week. Wutkowski reports that GM and presumably Chrysler have been lobbying the Bush administration for the money, no doubt made easier because Cerberus’s chairman, John Snow, is the former Bush-appointed Secretary of the Treasury. Purchase of bad auto loans is likely to anger many, but the “direct capital injection”– a suitcase full of freshly-minted money– is something else altogether. Will you, the new shareholders get any stock in GM-Chrysler? Of course not. Nor is there likely to be any accountability to the government beyond a nebulous promise by Rick Wagoner that “he’s working hard.” The kicker? The $5b is only the beginning. “People briefed on the merger discussions have previously said GM would need a minimum of $5 billion to start restructuring Chrysler’s operations. The total amount needed could reach $10 billion.”
Reuters »
Subscribe to New Content Alerts14 Comments on “ Bailout Watch 125: U.S. Treasury Dept. Could Allocate $5b to GM-Chrysler This Week ”
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POWERED
October 27th, 2008 at 4:43 pm
They’ll need a lot more than $5b after this announcement:
October 27th, 2008 at 5:43 pm
Spending 5 billion in a vain attempt to fix something worth 3 billion is, on a much larger scale, the experience my dad had owning GM cars.
October 27th, 2008 at 6:05 pm
Someone correct me if I am wrong (and I don’t think I am), where and when has it been announced that top management of GM have taken pay cuts? I presume they continue to rake in millions of dollars in compensation while sucking up taxpayers money. I sincerely hope that all Americans are so disgusted by this, they never buy any vehicle associated with GM, I know I won’t.
October 27th, 2008 at 6:25 pm
Isn’t there some way we can accelerate the process and kick the current administration to the curb on November 5th once we have a new President Elect?
I know it doesn’t work that way, but the President and his ~3,000 appointees can’t be replaced fast enough.
October 27th, 2008 at 6:57 pm
as seen on TTAC………
“Who’s your Mama, Obama” by rapper 2 Big 2 Fail
October 27th, 2008 at 7:07 pm
BNN reports Treasury Secretary Paulson told GM, “We just loaned you $25-billion. Use that!”
October 27th, 2008 at 8:18 pm
Haven’t heard anything from Ghosn and Co. lately. I’m thinking he missed his opportunity. The fact that it’s been in limbo for a week(?) now suggests that someone (GM/Chrysler) is waiting on someone else (Daddy Warbucks). This is going to be interesting.
October 27th, 2008 at 8:29 pm
So are we officially down to one branch of government now? The executive branch seems to have consolidated power quite nicely, which is truly amazing considering their approval ratings.
October 27th, 2008 at 9:53 pm
tulsa_97sr5: “So are we officially down to one branch of government now? The executive branch seems to have consolidated power quite nicely”
Nope, this conforms to Constitution Article 1, Section 9.
Indeed, Congress was more eager to help Detroit than was the Administration. As the Reuters article says, the “White House has long been cool to any straight bailout of the auto industry … Industry supporters inside and outside of government have mounted a furious lobbying campaign to tie the health of automakers to the needs of the general U.S. economy. … Key congressional lawmakers have also pressured Treasury to use all of its tools to free up liquidity.”
Everybody in the pool!
October 28th, 2008 at 8:20 am
But never you worry! The same party that has the white house still controls one house and is dead even with the other party in the second contrary to popular belief.
This is exactly why it is a bad idea to have one party controlling all parts of the government.
October 28th, 2008 at 8:52 am
John Horner:
“Isn’t there some way we can accelerate the process and kick the current administration to the curb on November 5th once we have a new President Elect?”
John, John, John, your argument is that a new administration (I’m assuming Obama) won’t do what the current administration is doing. That’s right - they will do more of exactly what you do not want them to do, which is had over your money to Detroit to piss away. If The ONE is elected, you should hope that they delay the inaugeration as long as possible.
October 28th, 2008 at 9:21 am
Spending 5 billion in a vain attempt to fix something worth 3 billion is, on a much larger scale, the experience my dad had owning GM cars.
I about fell off my chair laughing! Thanks for a laugh. So you’re familiar with my wife’s POS Buick?
John
October 28th, 2008 at 9:54 am
Spending 5 billion in a vain attempt to fix something worth 3 billion is, on a much larger scale, the experience my dad had owning GM cars.
I about fell off my chair laughing! Thanks for a laugh. So you’re familiar with my wife’s POS Buick?
Or our Cadillac which cost us more in repairs each month than the car payment was. AND IT HAD A WARRANTY!
October 28th, 2008 at 10:40 am
Or our Cadillac which cost us more in repairs each month than the car payment was. AND IT HAD A WARRANTY!
Her Buick had a 36k warranty…started falling apart, literally, at 36,100 miles.
John