Bailout Watch 128: GM Asks Feds for $10b for Chrysler Merger

bailout watch 128 gm asks feds for 10b for chrysler merger

Down the rabbit hole our tax money goes, as a “merger” has become a “rescue.” Reuters reports General Motors and Cerberus Capital Management have asked the U.S. government for roughly $10b in an “unprecedented rescue package” to support a merger between GM and Chrysler, according to “two sources with direct knowledge of the talks.” But don’t worry, because only $3b of that would buy Uncle Sam preferred stock in the merged automaker, “according to one of the sources, who was not authorized to discuss the matter publicly.” You may have qualms about government ownership of a large slice of the American auto industry, but Reuters writers are down with that. “It would… give U.S. taxpayers a large stake in the turnaround of a struggling auto industry that employs over 350,000 American workers and is credited with supporting employment for another 4.5 million in related fields.” So what of the remaining $7b?


“In addition to its equity stake, the U.S. government is also being asked to provide support for the GM-Chrysler merger by taking over some $3 billion in pension obligations under the terms of a proposal now before the government for review, the first source said.” A mere $3b? Hello? GM recently assumed $3.4b worth of pension obligations from Delphi. Is this some sort of union bribe? Breathe. Breathe. That still leaves a billion bucks on top of “our” stake and “pension obligations.” “The final component of the proposed support package would be a credit line that could include U.S. government purchases of commercial paper issued by GM to relieve short-term pressure on liquidity, the person said.”

GM’s burning through a billion dollars a month. A four billion dollar credit line buys them, what, enough time for the executives to float away on their golden parachutes before the taxpayer wakes-up to the fact that the new company is no more viable– actually a lot less– than the old one? You may want to write your senators and congressmen on this one.

Comments
Join the conversation
2 of 15 comments
  • AJ AJ on Oct 28, 2008
    Justin Berkowitz : October 28th, 2008 at 10:52 am Bristol Palin is 7 months pregnant, so going by the pro-choice definition (viability) she’s a mother... No, she has pretty much up until seconds before birth to decide. And even after a failed abortion in IL (for one), she can still deny that she's a mother.

  • Justin Berkowitz Justin Berkowitz on Oct 28, 2008

    @Airhen: Wow. Luckily for Bristol, I don't think IL travel plans are in her future. Russia, maybe, if she decides to leave the back yard.

  • DenverMike Pininfarina I know it's not related to this, I just like saying it.
  • Matt Posky I don't understand the appeal of fake meat and this seems to operate under a similar premise: You don't want the V8 because someone says it's bad for you. But you can have something designed to mimic the experience because that's what your body actually wants. The styling is cool I guess. But I don't understand why EVs don't just lean into what they are. Companies can make them produce any wooshing or humming noises they want. Buiding an entire system to help you pretend it still has a combustion engine seems a little lame.
  • DenverMike I'm sure it would have a volume control. It's nice to sneak into my neighborhood at 2am quietly. Or creep out, 4am. I don't get much sleep OK, but I always keep my V8 exhaust stock, as much as I love the sound of others loud. My stereo would make it pointless anyway.
  • FreedMike I’d love to see more tracks, or off-road parks if that’s your jam. But for those of us who’d love to take part in this kind of thing, practicality is the limiting factor. Racing has always been expensive, and most people don’t want to do it with their daily drivers - I’d love to see what my GLI would do on a track, but not at the cost of voiding my warranty, or potentially wrapping up the car (which I’m pretty sure would put me on State Farm’s Keith Moon-trashing-the-Holiday Inn list). As a practical matter, you have to have a vehicle that is intended to be used for racing, and the ability to fix it; most folks don’t have that kind of money or skill set.
  • Dukeisduke Oh, so it *is* a hatchback. Last night, I watched the replay of the reveal with Tim Kuniskis presenting the car, on Instagram. A "fly-through" of the car on the pre-rollout video made it look like they were going through an open hatch, so it had me wondering. The car attracted a lot of negative comments on IG, on feeds of guys who were there live.This is probably the least "electric car" electric car.
Next