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WASHINGTON — The Bush administration is examining a range of options for providing emergency financial help to spur a merger between General Motors and Chrysler, according to government officials.

People familiar with the discussions said the administration wanted to provide financial assistance to the deeply troubled Big Three Detroit automakers, possibly by using the Treasury Department’s wide-ranging authority under the $700 billion bailout program that Congress approved this month.

Another option under consideration is to tap a $25 billion loan program that Congress just created to help the auto companies modernize their plants. A third option would involve going back to Congress, immediately after the Nov. 4 election, for authority to spend funds aimed specifically at the auto industry. But officials have not yet decided how much assistance to provide or how to structure any aid program.

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A bailout for carmakers would be the latest in a series of government-financed rescue efforts for banks, Wall Street firms and an insurance conglomerate. While few experts dispute the car industry’s troubles, rescuing them would also increase political pressure to help ailing industries like airlines and steel producers.

The automobile industry and lawmakers from Michigan are now arguing that the car companies should be included, because their financing subsidiaries, which have been starved for credit, represent an important channel for consumers to obtain loans to buy cars.

Any federal help for the financing units could be used to provide car loans, which is seen as crucial to increasing car sales. Many dealers have had trouble closing sales with car buyers because of tighter lending standards.

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The Treasury Department, which oversees the rescue program, warned on Monday that the car companies would not be eligible for the capital injections that the government was offering to banks and some insurance companies. Under that program, the government hopes to invest $250 billion in banks and would receive nonvoting preferred shares in exchange.

“The capital purchase program is available only to federally regulated banks and savings institutions,” said Michele Davis, a spokesperson for the Treasury.

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But Treasury officials did not rule out other forms of assistance. Under the law that Congress passed in early October, the Treasury Department has almost unlimited discretion to buy up any kind of assets from any kind of financial institution.

Ford and Chrysler both have financing units, mainly for the purpose of providing car loans, and those subsidiaries might qualify as financial institutions.

General Motors is in a more complicated situation, however, because it spun off 49 percent of its financing unit, the General Motors Acceptance Corporation, to Cerberus, the same private-equity firm that acquired Chrysler after the breakup of DaimlerChrysler last year.

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The failure of General Motors, the Ford Motor Company or Chrysler would have broad consequences for the economy. The companies combined employ more than 200,000 people in the United States, and indirectly support jobs for millions more Americans through their suppliers and dealerships.

If any of the three companies were to go bankrupt, it would probably leave behind huge liabilities for federal and state governments. Shortfalls in their pension plans would become the responsibility of the Pension Benefit Guaranty Corporation, and its reserves are already stretched.

more here: http://www.nytimes.com/2008/10/28/business/28auto.html?_r=1&hp&oref=slogin
 

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They'll give it to them.

I can't wait til next year when we hear about all the mis-managed money given to people and companies that didn't deserve it.
Why do they keep saying merger? Could it be there bluffing about a merger, too get a auto aid deal? Sound's like it. The reason I'm saiding this is because, first it was chyrsler's dollar's , now it's a goverment auto-aid.
 

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Why do they keep saying merger? Could it be there bluffing about a merger, too get a auto aid deal? Sound's like it. The reason I'm saiding this is because, first it was chyrsler's dollar's , now it's a goverment auto-aid.
I'm sure the money will be tied to a merger. The government's not stupid enough to just hand over a cheque without conditions. Even that $700B going to the banks has loads of conditions.
 

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I'm sure the money will be tied to a merger. The government's not stupid enough to just hand over a cheque without conditions. Even that $700B going to the banks has loads of conditions.
It's funny because you believe that there are actually conditions [that they won't circumvent] attached to these loans.

Remember, these same businesses getting welfare from the government are the ones who were able to, among many other actions, rename the activity of selling insurance, thereby sidestepping the regulations associated with selling insurance, and the government was absolutely complicit by virtue of its benign neglect. Do you honestly think that these people won't very easily come up with all manner of loopholes to circumvent these conditions?

I've got a bridge to sell yah in Brooklyn. You interested?

Remember, honest men like Schumer, Frank, Dodd, and Bush are playing pivotal roles in these plans. That should sober even the drunkest of drunks.
 

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It's funny because you believe that there are actually conditions [that they won't circumvent] attached to these loans.

Remember, these same businesses getting welfare from the government are the ones who were able to, among many other actions, rename the activity of selling insurance, thereby sidestepping the regulations associated with selling insurance, and the government was absolutely complicit by virtue of its benign neglect. Do you honestly think that these people won't very easily come up with all manner of loopholes to circumvent these conditions?

I've got a bridge to sell yah in Brooklyn. You interested?

Remember, honest men like Schumer, Frank, Dodd, and Bush are playing pivotal roles in these plans. That should sober even the drunkest of drunks.
how about Bernacke? Paulsen? talk about the fox guarding the hen house! John Snow at Cerberus? and we're to believe they have no clue what's happening? Iraq, oil bubble, stock market, and The Great Bank Robbery. Bush and the boys are milking this country like there is no tomorrow and people are so stupid that the crimes are overlooked.
 

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General Motors is in a more complicated situation, however, because it spun off 49 percent of its financing unit, the General Motors Acceptance Corporation, to Cerberus, the same private-equity firm that acquired Chrysler after the breakup of DaimlerChrysler last year.
I remember differently. Can anyone comment?
 

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They'll give it to them.

I can't wait til next year when we hear about all the mis-managed money given to people and companies that didn't deserve it.
How many folks work for GM/Chrysler in the U.S ? What do the workers and companies contribute to the tax rolls? What would be the cost to the U.S government if both of these companies failed? How many suppliers would fail? How many dealerships? How many small companies in the cities that have offices/factories tied to GM/Chrysler would fail? What would the true human cost be? What would be the ultimate cost to the U.S taxpayer?

Executive pay restrictions, man hour guarentees etc. etc. can make this a big win for the average U.S citizen. Big business must learn that they are responsible to more than the shareholders. A return to real morals and ethics would be good for the North American business community.
 

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Sort of interesting thing about the industry nowadays is that dealerships probably employ a lot more people than the manufacturers. Consider if GM has 6600 seperate dealer locations, with Ford having 3900 and Chrysler having 3500, that works out to 14,000 dealers between them.

If each dealership employs 100 people, that is 1,400,000 people working in those dealerships. This article states that GM, Ford and Chrysler direclty employ 200,000 people in the USA.

Now the supplier companies in addition have great numbers. There is estimates of 5-1 or even 10-1 for suppliers to manufacturer employees. If it is 10-1 it is a huge 2,000,000 employees at the suppliers.

Also to be considered is the imports employ directly probably 60,000 Americans. So at a 10-1 supplier ratio that is 600,000 supplier workers for them. The imports also have vast dealership networks, and considering the market is around 50% import and 50% domestic, its probably safe to say the import dealerships together employ over 1,000,000 people. If the domestic dealers employ 1,400,000.
 
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