Tuesday, October 28, 2008

-GM/Chrysler seek $10 bln govt aid for merger - sources | Deals | Private Capital | Reuters

UPDATE 2-GM/Chrysler seek $10 bln govt aid for merger - sources | Deals | Private Capital | Reuters: "General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) and Cerberus Capital Management have asked the U.S. government for around $10 billion in an unprecedented rescue package to support a merger between GM and Chrysler LLC, two sources with direct knowledge of the talks said on Monday.

The government funding would include roughly $3 billion in exchange for preferred stock in a merged automaker, according to one of the sources, who was not authorized to discuss the matter publicly.

The U.S. Treasury Department is considering a request for direct aid to facilitate the merger and a decision could come this week, sources familiar with the still-developing government response said earlier on Monday."
From the NY Times:
"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..."
I was trying to imagine what someone who had just awoken after a ten year nap would think. The government not only bailing out banks, but now at least considering buying stakes in car companies? Where do you stop? My family's small grocery store chain would definitely like a government handout too. Or better yet, how about FinanceProfessor which clearly is in the red every year.

1 comment:

Michelle said...

Here here!...and I live in Metro Detroit...when will we wake up and realize that Nationalization of large companies is NOT a good idea. The US auto industry has been making TERRIBLE decisions for 50 years now; none have made financial sense...and now they get a blank check???