Will US Taxpayers Fund GM-Chrysler Merger?

29 October 2008

WASHINGTON, DC: Word around the Motown parish pump is that General Motors' ceo Rick Wagoner (pictured) has made a direct approach to US Treasury Secretary Hank Paulson seeking financial help to fund its mooted merger with Chrysler.

Senior executives from both companies have reportedly approached the US Treasury with outstretched hands. Any resultant deal would likely come under the administration's TARP (Troubled Assets Relief Program) credit crisis umbrella.

White House spokeswoman Dana Perino confirmed that talks between the parties had taken place, adding: : "It's possible that some of those financing arms could be a part of the rescue package, the TARP. That's one of the reasons Treasury has been in contact with them."

Perino also said that the White House is attempting to accelerate the release of $25 billion (€20.09bn; £16.16bn) in approved loans to the auto industry – although these are purportedly tied to making greener, more fuel-efficient cars.

The spider sprawled in the centre of this web of mismanagement is private equity firm Cerberus Capital Management, controlling shareholder both of Chrysler and GM's financing arm, GMAC.

If the present, or designate, incumbent of the White House gives the nod to a taxpayer-funded bail-out, Detroit's status as home to the US auto industry's 'Big Three' will be diminished to 'Big Two'  (GM-Chrysler and Ford).

Even eventually – mayhap – 'Big One?'

Data sourced from Telegraph.co.uk; additional content by WARC staff