Daily Auto News Government May Want GM/Chrysler Merger
Daily Auto News
Treasury Department officials deep into talks with America’s largest automakers over a federal bailout to prevent the collapse of the domestic auto industry may force General Motors and Chrysler to merge as a condition of receiving aid.
The New York Times reports, “The White House and the Treasury are deep into negotiations with General Motors and Chrysler over reorganization plans that could result in freeing up more than $14 billion in emergency loans to keep the companies afloat through the first quarter of 2009, according to industry executives and a senior administration official.” Government officials reportedly “want an agreement with the automakers before Dec. 25. It was unclear, however, when all of the particulars might be worked out, said the senior official, who spoke on the condition of anonymity because of the delicate nature of the negotiations.”
While many analysts have speculated that the Bush administration only seeks to “keep G.M. and Chrysler alive until President-elect Barack Obama takes office,” the Times now reports that “In the negotiations, the Treasury secretary, Henry M. Paulson Jr., is effectively taking on the role of ‘auto czar,’ which was envisioned in the carmakers rescue bill written by the White House and Congressional Democrats and approved by the House but blocked by Senate Republicans.”
While negotiating with Paulson, the Wall Street Journal reports, “General Motors Corp. and Chrysler LLC have reopened merger talks,” which “could be a way for [Chrysler's owner, Cerberus Capital Management] to show Washington — which is weighing a $14 billion rescue package for the auto industry — that it wants to cooperate in restructuring the industry.”
MarketWatch cautions, however, that “GM spokesman Tony Cervone denied the report Thursday morning, saying GM’s stance on the merger remains unchanged since talks were suspended in November.”
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