General Motors Corp. Chairman and CEO Rick Wagoner is seeking a quick release of funding from federal officials to facilitate a merger with Chrysler LLC. Potential sources of funding include the Energy Department’s $25 billion dollar loan program, and the U.S. Treasury, which is managing the $700 billion bank bailout and has the authority to loan money to corporations in crisis. A government official confirmed that GM was seeking around $5 billion in funding, which could be used to refinance Chrysler debt, help pay for buyouts, or cover other tie-up costs.
As auto sales continue their drastic decline, the Detroit Big Three are rapidly burning holes in their pockets. Lobbyists for the Auto Manufacturers state that “It may be in the best interest of the federal government to provide assistance to the companies in the face of potential bankruptcy”, while opponents of such a government bailout for these corporations feel that this would be a misuse of taxpayers’ money, and would cost thousands of jobs. The Treasury currently has officials reviewing GM’s request and the company has hired a number of prominent former Treasury officials to lobby on its behalf, according to records filed with the U. S. Senate. GM and its lobbyists are emphasizing the need for “quick access” to that $25 billion loan package.
Families whose livelihoods are tied to Chrysler are waiting nervously to see if the merger will go through, especially after Chrysler recently said it would cut about 5,000 jobs, or a fourth of its salaried work force, by the end of the year. In one of the worst auto markets in decades, GM is also seeking the kind of relief that would boost its cash reserves. By Nov. 1, the company will have reduced its salaried work force by 15 percent, or around 5,000 workers, since June. GM also announced that it would need to make more white-collar cost cuts which would include involuntary layoffs.
The While House has said that it is monitoring the woes of the Big Three automakers, indicating the possibility of a government bailout under the $700 billion Troubled Asset Relief Program. While all involved parties seem to agree that federal aid is crucial to the implementation of a merger between GM and Chrysler, the Energy Department has said that it could take “six to 18 months or more” to release the money.
For more information on this topic, check out this article on www.detnews.com, or contact our NC lemon law office.
