After pleading for government assistance after being unable to find the funds they needed to stave off bankruptcy, GM and Chrysler may be getting the bailout they asked for. Why not? After all, the government seems to be in the habit of handing out bailouts to practically everybody. And it’s not like that money was being earmarked to go towards developing fuel-saving technologies to save the environment. Oh, wait.
WSJ: The Bush administration is working to release to General Motors Corp. a portion of the loans Congress approved for the auto industry, according to a person familiar with the matter, a move that could help ease the way for the company’s discussed merger with Chrysler LLC.
GM and Chrysler’s majority owner, Cerberus Capital Management LP, have been negotiating a complex deal in which GM would end up owning its smaller Detroit rival, but the parties have struggled to line up financing. The combined entity would need about $10 billion in new equity to cover the cost of laying off workers, closing plants and integrating the two companies, say people involved in the talks.
The government loan, which may total around $5 billion, would come from the $25 billion in low-interest loans approved by Congress and being administered by the Energy Department. The funds are aimed at helping Detroit retool plants to meet new fuel-efficiency standards. It isn’t clear how quickly the money could be made available or whether it would come with strings.
Although the loans are supposed to speed the availability of fuel-saving technologies, the money could help steady GM’s finances and make it easier for the struggling auto giant and Cerberus to persuade investors to back a merger.
That’s great. One small step forward for Detroit, one giant leap backward for the environment.
Really though, we’re kind of amazed that GM and Chrysler just got the bailout they asked for. The government’s really bending over backwards to keep these automakers in business, which is very vintage, “I’m not signing the Kyoto treaty” President Bush. Remember the Kyoto treaty?
On a lighter note, it also reminds us of this joke from the opening scene of the Friends pilot (at the four-minute mark when Jennifer Aniston shows up):
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