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Automakers waited all week for news of the expected bridge loan, which finally came on Friday. "The longer we wait, the worse the situation becomes," said one auto executive close to the situation. The Wall Street Journal reported that GM and Chrysler restarted merger talks, but both companies have flatly denied it. "We certainly are not in any merger talks with Chrysler," says Tom Wilkinson, a GM spokesman. "The report was simply wrong...
...Auto dealers are putting out their own message of distress. Annette Sykora, chairwoman of the National Automobile Dealers Association, said that with each passing day, more dealerships are closing and more people are losing their jobs. "We've heard encouraging words from the White House, but time is of the essence," Sykora announced in a written statement on Wednesday. This year alone, 900 dealerships out of 19,700 are expected to close. (See pictures of the most important cars of all time...
...important to go bankrupt, no matter how miserable their performance. The resulting unemployment would be unacceptable, the impact on the financial sector and economic growth too great. That, in effect, is the same argument being used today by supporters of a government rescue for the cash-burning U.S. auto industry. The consequences of allowing a manufacturing giant like GM to collapse would, their thinking goes, be too onerous for an economy already in recession to stomach. (See the 10 worst business deals...
...massive loan is just the latest move in a long game of high-stakes hot potato involving Detroit, Congress, the White House and the incoming Administration. Obama first asked Bush to do something to save the auto companies in their initial meeting after the Nov. 4 election, but Bush rebuffed him. The problem then went to Capitol Hill, where it spent two weeks getting ground down, spiced up and stuffed into legislative packaging, only to have the whole sausage thrown out when the Senate failed to move the bill before adjourning for the holidays. (See pictures of the remains...
...auto companies then did their part, with Chrysler recently announcing it would shut down operations for a full month, raising the threat of catastrophic liquidation if someone in Washington didn't cough up some money. Bush's hand was forced. In theory, the job of saving the car companies would have gone to the Commerce Department, but its chief, Carlos Gutierrez, doesn't have access to the kind of money Detroit needs, so Bush gave the job to Treasury Secretary Hank Paulson...