I was watching too but what I heard is that it was on hold and not formally rejected....
Paulson to GM-Chrysler: No Bailout for You!
Posted Oct 31, 2008 01:56pm EDT by Aaron Task Related:
GM,
F,
NSANY,
TM
Apparently there are limits to the government's bailout bonanza after all.
After funding bailouts and backstopping deals for a number of banks, brokers, GSEs and insurance companies, the Bush administration will not provide funding for a GM-Chrysler merger,
Reuters reported early Friday morning.
As with all things related to the autos, this is a highly polarizing issue.
On the one hand, a lot of jobs are potentially at stake here. Earlier this week,
six governors sent a letter to Secretary Paulson and Fed Chairman Bernanke encouraging government funding for the deal, citing the following:
- 355,000 Americans are directly employed by GM, Chrysler, and Ford.
- 4.5 million Americans work in sectors supported by the auto industry.
- Over 2 million Americans received healthcare benefits from the "Big 3."
- 775,000 retirees and their survivors receive pension payments from the industry.
On the other hand, government support for a GM-Chrysler merger can't guarantee the jobs of current employees or the benefits of retirees. Even if you could set aside complicating issues like union contracts and the quality of the cars being made in America, automakers around the world are struggling right now with a slowing global economy, including
industry leader Toyota and
Nissan, another potential partner for Chrysler.
In addition, a government-sponsored deal will help private equity firm Cerberus Capital, which
bought a majority stake in Chrysler at arguably the worst possible time.
At this point a GM-Chrysler deal appears to be on hold, at least until after the election. But this political and economic football can only be kicked down the field so far, and for so long.
