General Motors Co. (NYSE: GM) Chief Executive Rick Wagoner, the longest serving head of an automaker, is personally lobbying members of Congress to back a federal bailout of the struggling automaker, which wants to merge with its much weaker rival Chrysler LLC.Bloomberg News, which broke the story, reported that Wagoner's "involvement includes attending meetings, such as one with Treasury Department officials last week in Washington." You can bet that Michigan's powerful senior member of Congress, John Dingell, is attending many of the same meetings as Wagoner. GM no doubt is employing an army of lobbyists -- both Republicans and Democrats -- to press its case. The company, which for now may be the largest, has little choice.
GM and Chrysler would need between $10 billion and $12 billion to integrate their operations, according to a Citigroup note cited by Bloomberg. Combining the two fading industrial behemoths would be a logistical nightmare. Imagine trying to combine disparate systems for everything from personnel to purchasing to accounting. Let's not forget the byzantine IT systems at both companies as well.
Economically, it's hard to justify bailing out GM. Decades of incompetent management at the Big Three resulted in the industry drowning in billions of debt. The problem with telling the industry "no" is political. Dingell is a 1,000-pound gorilla in Congress. The auto industry continues to have considerable clout in Washington as well. Their argument is simple: if Wall Street fatcats can get a federal bailout, why not us?
The problem with rescuing Wall Street is that lots of struggling industries are going to pass the hat in Congress. What about the airlines? The retail sector? Pharmaceuticals? When does it end?
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Reader Comments (Page 1 of 1)
10-28-2008 @ 2:04PM
Virgil Bierschwale said...
Even though I'm a big fan of GM, its time for all of us to agree that bailouts are a very big mistake that we are going to regret for years to come.
Anytime you reward someone for failure, you only receive failure in return.
There are plenty of others that will be standing in line to buy the pieces to make new automobiles and all they need is the opportunity that poor management raises.
Virgil
http://www.KeepAmericaAtWork.com
10-28-2008 @ 2:11PM
anfscd15218 said...
How about a few billion $ for manufacturers of buggywhips?
10-29-2008 @ 5:39PM
Hubba said...
All of these incompetent MBA CEO's are destroying American Industry, no bailouts for any auto companies until the CEO's are fired. Rick Wagoner is highly overpaid and GM constantly makes cars that people don't want without the features buyers expect "Chevy Cobalt no temp gauge?" have to bring up on digital display? The problem now is the CEO's don't know anything about the businesses they are running.
10-29-2008 @ 3:40PM
Billy Carter said...
It seems like the faucet is wide open for Mr. Paulson's friends on Wall Street and now with GM/Chrysler, who has invented highly in Chrysler but former treasury secretary Snow.
The public needs to wake up to this, only we can stop this bull...
11-14-2008 @ 11:35AM
WOODY said...
WAGONER NEEDS THE BALLS TO TELL THE GOVERNMENT TO GO SCREW THEMSELVES AND WE'LL JUST GO BROKE. JUST WHAT DO YOU THINK THE POLITICIANS WILL DO? THEY WILL SHIT THEIR PANTS. IF YOU GO HAT IN HAND TO ANYONE, THEY WILL TREAT YOU LIKE SHIT. LET THEM SHIT WHEN HE TELLS THEM HE WILL GLADLY ADD LOTS OF NEW "EMPLOYEES" TO THE GOVERNMENT ROLLS. IF YOU'RE GOING TO GET PAID THE BIG BUCKS, YOU HAD BETTER HAVE SOME BALLS.
11-20-2008 @ 10:07AM
John M said...
LET THEM FAIL!!!!!!!!!!!!! We bail these clowns out it's going to backfire. Who is going to buy? Chek the unemployment rate. People aren't buying cars because they do not have any MONEY! They are going to fail anyway. If no one is buying why waste the money. Abolish the unions the are killing this country.
12-03-2008 @ 10:04PM
Lisa Holbern said...
I have a 2007 gmc sierra 1500 4X4 that I paid 38000.00 The driver side electrical system melted and the side airbags deployed for no reason.no impact occured. GMC district representative will not speak with me as he does not speak with any customers? can you see a problem. GMC will not repurchase this vehicle from me. I now have a 38000.00 sitting in a garage that I will not drive for obvious safety reasons.so to GMC you already received a bailout from me or, did I receive one from GMC?
12-06-2008 @ 7:15PM
Paul Krug said...
The 2009 Cadillac Escalade Hybrid, a $73,000 3 ton behemoth, is GM's answer to the consumer's desire for fuel efficient vehicles. GM has had 14 years since the introduction of the Prius to contemplate the future and introduce innovative competitors. After 14 years we have the Escalade. GM's demand for $18B is only the beginning of a deep black money pit. GM needs to restructure and prove its viability in Chapter 13 bankruptcy court, not at taxpayer expense.