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.
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