General Motors (NYSE: GM) and Chrysler executives have managed to drive their business to the brink of bankruptcy. And the private sector appears reluctant to provide the financing they would need to restructure in bankruptcy. Yesterday, Tribune Co. (NYSE: TXA) went over that precipice without a penny of government money. But GM/Chrysler cannot be allowed to follow that natural path for a failed business -- they need government to save them from the free market.

And so this morning a plan to socialize their losses goes before Congress. It creates a car czar who will administer $15 billion worth of loans. The car czar can demand that GM/Chrysler pay back the loan by March 31, 2009 if they don't come up with a restructuring plan, throwing them into bankruptcy. If the car czar thinks they're negotiating in good faith, they get a 30-day extension. It's not clear what happens if they come up with a restructuring plan by the 31st. A restructuring won't pay back the $25 billion and will probably require even more taxpayer money.

But the plan also requires the car czar to approve transactions above $25 million; it limits executive compensation; demands the sale of their corporate jets; prohibits paying dividends and requires that the government share in future profits and taxpayers be repaid before any other shareholders. So should Congress approve this bill?

MAJOR PAPERS:

• The Wall Street Journal reported that a spokesperson for New Corporation (NYSE: NWS) said the company has dropped out of the bidding for Tribune Co's (NYSE: TXA) Newsday. This leaves Cablevision Systems Corporation (NYSE: CVC) as the apparent winner of the auction.
• According to people familiar with the matter, the Wall Street Journal reported that American International Group Inc's (NYSE: AIG) airplane-leasing unit is considering a split from the company. The people said International Lease Finance Corp have grown "increasingly concerned" the company will be hurt by AIG's financial troubles.
• Royal Dutch Shell Plc (NYSE: RDS.A) and Spain's Repsol YPF SA (NYSE: REP) are pulling out of one of Iran's biggest gas projects, the $10B-plus development of phase 13 of South Pars, the world's largest gas field, the Financial Times reported.

• Bloomberg reported that HSBC Holdings Plc (NYSE: HBC) set aside a smaller-than-forecast $3.2B for bad loans in the U.S. The bank also said its Q1 profit was higher than Q107.

The Wall Street Journal, which is owned by News Corp. (NYSE: NWS) is reporting that News Corp. has withdrawn its bid for Newsday (subscription required). Rupert Murdoch's News Corp. was unwilling to match the $650 million bid offered by Cablevision (NYSE: CVC). New York Daily News owner Mort Zuckerman had also bid on Newsday.

Besides being higher, Cablevision's bid is likely to face fewer regulatory hurdles, considering Murdoch's and Zuckerman's New York holdings. But, according to the Journal, the bid could prompt some pushback from investors who question the the strategic rational for the deal. Cablevision could bundle Newsday subscriptions with other broadband and phone services it offers in the New York area.

Tribune Co. (NYSE: TXA), current owner of Newsday, recently reported that first-quarter revenue and circulation was down, as newspapers continue to struggle. Cablevision also reported a first-quarter loss of 11 cents per share.