General Motors looking for some federal aid

First of all, I don’t think government, I mean the taxpayers, should be supplying money to companies that want to purchase other companies. But I guess GM really has no choice since our imperial federal government forcefully took over the banking industry.

General Motors chief executive Rick Wagoner is actively lobbying the federal government for financial assistance as the company prepares for a merger with Chrysler.

It is estimated that GM would need a capital infusion of $10 to $12 billion to integrate the operations of the two companies. Government help could also provide a sense of confidence to investors, allowing the deal to go through more smoothly.

GM, the world’s largest automaker, has been in talks with Chrysler about a possible merger since Sept., but the deal is looking more imminent as each company continues to hemorrhage in a tough economic environment. GM is losing an estimated $1 billion a month currently and looks to be on the verge of bankruptcy if the deal does not work out.

The economic downturn has taken its toll on the auto industry - maybe more so than any sector of the economy, other than finance. Tightening credit standards, unemployment and rising gas prices have all contributed to a dismal year for Detroit’s Big Three.

One possibility is for the government to infuse cash into the finance arm’s of the automakers to spur more lending.

“Automakers do have financing arms — many of them do — and it’s possible that some of those financing arms could be a part of the rescue package,” Dana Perino, the White House press secretary, told reporters on Monday. “We’re trying to work with them as much as we can. There are some things we may or may not be able to do.”

Read the full story at The New York Times

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