Is General Motors too big to fail?
Rick Wagoner would sure like us to think so. Mr. Wagoner, the chief executive of the ailing automotive giant, spent most of Friday down in Washington, pressing his case for a government rescue.
Yes, G.M. wants our tax dollars too. Banks are getting billions. Insurance companies are getting billions. Why not G.M.?
The answer to that question depends on a few crucial points that few people seem willing to talk about, at least publicly: jobs, wages and the United Auto Workers.
Mr. Wagoner hopes that one way or another that Washington will help finance a merger of G.M. and Chrysler, salvaging the companies, their employees' livelihoods and his own legacy. He is painting G.M. as too big, too important and too interconnected to fail without dire consequences for the entire economy.
G.M., the line goes, is sort of an automotive Lehman Brothers — and we all know what happened when the government let Lehman go. Mr. Wagoner seems to be trying to whip up enough panic to make government intervention politically palatable.
U.S. May Give GM Billions in Loans
The Bush administration is working to release to General Motors Corp. a portion of the loans Congress approved for the auto industry, according to a person familiar with the matter, a move that could help ease the way for the company's discussed merger with Chrysler LLC
GM and Chrysler's majority owner, Cerberus Capital Management LP, have been negotiating a complex deal in which GM would end up owning its smaller Detroit rival, but the parties have struggled to line up financing. The combined entity would need about $10 billion in new equity to cover the cost of laying off workers, closing plants and integrating the two companies, say people involved in the talks.
Prior Indymedia Post about the history and details regarding the mess GM is in:
Feds may help automakers, aid in GM-Chrysler deal
And the White House said Monday that the financing arms of the automakers might be eligible for federal help under the bank stock-purchasing portion of the $700 billion financial rescue package.
Officials "at the highest levels" of the Treasury, Energy and Commerce departments have talked to top automaker executives on the topic, presidential spokeswoman Dana Perino said.
"It's a possibility that they could qualify under it," she said.
It would be up to Treasury to determine whether any of the automaker financing arms could qualify, she said. GMAC Financial Services, Chrysler Financial and Ford Motor Credit Co. all could be eligible.