Saturday, March 21, 2009
GM, Chrysler wanting more money than expected; and watch President Obama give it to them
Surprising news from Detroit: General Motors and Chrysler probably underestimated the amount of money they need from the federal government to keep operating.
And since the Obama administration just bailed out some of suppliers to the automakers, GM and Chrysler will get the added booty, too. Welcome to AIG, Part II.
Bloomberg News reports:
General Motors Corp. and Chrysler LLC may need “considerably” more than the $21.6 billion in aid they requested, which was based on optimistic recovery plans, said Steven Rattner, the Treasury’s chief auto adviser.
President Barack Obama’s auto task force is assessing proposals from GM and Chrysler to decide whether to recommend U.S. assistance or tip the carmakers into bankruptcy. Rattner made the comments yesterday on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend.
The task force will give its “sense of direction” by March 31, Rattner said. The companies have received $17.4 billion since December and asked for the additional $21.6 billion in aid last month, an amount that depends on achieving turnaround plans that are “somewhat ambitious,” Rattner said.
“It could be considerably higher, I won’t deny that,” Rattner said, when asked whether U.S. aid sought could rise. “Like all management teams they tend to take a reasonably, slightly perhaps, optimistic, view of their business. So it could be more, I can’t rule that out.”
Greg Martin, a GM spokesman, said yesterday its restructuring plan has “a conservative outlook.” The company will continue working with the task force “and we’ll keep them informed of our liquidity needs,” Martin said in an e-mail.
Chrysler said in a statement that its plan is “realistic” and “conservative.”