Quick Hits: Government Says No To $10 Billion Handout for GM
Brief scrutiny of today's headlines.
It looks like the possible merger between General Motors (GM) and Chrysler is on hold.
The US Treasury Department has rejected a request by General Motors for as much as $10 billion to help finance its possible merger with Chrysler, the New York Times reports.
Instead, the Treasury Department says the Bush administration will attempt to speed up the $25 billion loan program for fuel-efficient vehicles. Congress approved the measure in September. It will be administered by the US Energy Department.
Reportedly, Treasury officials are reluctant to expand the $700 billion rescue package to include industrial companies - or to play a role in the General Motors-Chrysler merger, which would probably result in tens of thousands of job cuts.
President Bush may not want to take action until after the election, preferring to leave the final decision to the next president. Democratic nominee Barack Obama says he favors boosting aid to auto companies, while Republican nominee John McCain hasn't said he supports aid beyond the $25 billion to develop fuel-efficient vehicles.
General Motors and Chrysler will continue discussions, but a deal is unlikely until Uncle Sam decides what to do, if anything.
In any case, the federal loan to American International Group (AIG) has been used more quickly than anticipated and the company's top executives have squandered taxpayer money on trips to resorts and England, suggesting the company could benefit from some adult supervision. This may have soured the government on making new loans.
It's hard to imagine GM, Chrysler and Ford (F) surviving in their current form - and Uncle Sam may have a hand in the shakeout.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter