After day one of round two of the $34 billion automaker race to viability, a merger between GM and Chrysler is back on the table, along with just about everything else. Lawmakers are looking for that magic headline that will make the bailout make sense to taxpayers. Senate Banking Committee Chairman Sen. Chris Dodd noted that nothing focuses attention on solutions like impending death.
So far, prospects of an auto czar doling out big chunks of money or a federally mandated merger haven’t convinced the Treasury to use its mighty TARP chest to fund salvage efforts for the auto industry. The Fed could make a loan to automakers in some circumstances. It is expected to send a letter to Dodd today explaining how it must obtain sufficient collateral under law to make any emergency loans, a source familiar with the letter told Reuters.
Motor Trend’s blog argues that a shot-gun wedding would just allow GM to replenish a brand line-up that it has just shrunk to make itself more nimble. In his testimony, GM CEO Rick Wagoner noted that earlier merger talks with Chrysler failed because GM did not have the money.
Chrysler CEO Robert Nardelli said his job would likely be the first to go in a merger with GM, but “I would do it” if it would save Chrysler and its workers. Such self-sacrifice is about as heartwarming as the auto execs taking hybrids to Washington instead of jets. Nardelli has already said he is willing to have his salary cut to $1, which is where it is already. His severance package from his days at Home Depot will ensure that he can always afford to buy a car.
But if lawmakers are hoping a merger will somehow resuscitate the industry, they may want to think again. United Auto Workers President Ron Gettelfinger questioned claims of cost savings from a merger and said such a deal would bring “unbelievable” job losses. No congressional action on aid is expected before next week — and perhaps not even then — despite dire warnings that GM could collapse by year-end without aid.