The five most senior General Motors (NYSE: GRM) executives, along with the 20 next highest-paid employees, are going to see their cash compensation fall $3.9 million (31%) on a year-over-year basis.

The decision was made by the "independent master" that was appointed to set pay and stock levels for those in charge of companies that have received a majority of the funding from the federal government. GM is not on its own, as top execs at GMAC (the company's financing arm) and Chrysler will see their compensation cut as well.

A123 Systems (NASDAQ: AONE) got its start back in 2001 in Dr. Yet-Ming Chiang's laboratory in MIT. Along with two others -- Gilbert N. Riley, Jr., and Ric Fulop -- he saw a huge opportunity to build new battery technology. While it took six years to hit the market, it was well worth the effort.

Today, A123 launched its IPO (here's a profile on the deal). The company sold 28.1 million shares at $13.50 each. With this slug of capital, A123 can continue to build out its operations and capitalize on the growth opportunities.

On Wednesday, Chrysler CEO Sergio Marchionne announced that he has designed a five-year plan for the automaker (Wall Street Journal, subscription required). Marchionne believes the restructuring will be slow initially, but should improve "significantly" next year.

We should receive the plan by the end of November, and Chrysler will start reporting its quarterly results by the end of the year. Marchionne stated, "We are going to become a normal reporter in the U.S. hopefully by the end of 2009. ... You will see numbers like you see for everyone else." One can only assume that this is one of the "whole pile of surprises" Marchionne promised back in June when Fiat took over Chrysler.

The Congressional Oversight Panel reported on Wednesday that most of the $23 billion in taxpayer funds provided to General Motors and Chrysler is unlikely to be repaid. The Congressional Budget Office estimated in June that taxpayers would lose $40 billion of the first $55 billion provided to the auto industry.

The Treasury Department acknowledges that most of the $23 billion provided by the Bush Administration is likely gone forever, but added that there is a "reasonably high probability of the return of most or all of the government funding" provided by the Obama administration.

Bailout coverage has taken on a celebratory tone in recent days as a slew of banks including Goldman Sachs (NYSE: GS) have repaid TARP money, leaving taxpayers with what looks like a handy profit. In addition, equity stakes in Citigroup (NYSE: C) and Bank of America (NYSE: BAC) are sitting on a handsome paper profit.

The only problem is that hundreds of banks have received TARP money. Of course, the most healthy ones are paying it back quickly. The rest are still in limbo, and the result is that the Treasury Department is realizing plenty of gains while all the losses -- investments in companies like American International Group (NYSE: AIG), General Motors, and Chrysler -- remain unrealized and largely ignored.

Now that Cash For Clunkers is over, the auto industry has a problem: Where will car sales come from now?

Everyone who had an old car and wanted a new one took advantage of the Cash For Clunkers plan -- who is going to go buy a new car the day after the government stopped paying people $4,500 to buy cars?

J.D. Power and Associates reduced its 2010 sales forecast to 11.5 million units from 11.6 million -- citing the impact of Cash For Clunkers. In other words, a big part of what Cash For Clunkers did was borrow sales from the future and front-load them, and now there's nowhere to go for car sales now.

As we noted yesterday, a lot of auto dealers have decided to pull out of the popular "cash for clunkers" program. This comes as a result of lack of payment by the government, and today General Motors said that it will start to advance dealers the cash that they are due from the government related to the program.

Today's announcement by General Motors marks a change in company policy, which had earlier stated that it was not in a position to come to the aid of its dealers.

With so many people rushing out to take advantage of the "cash for clunkers" program, American auto maker Ford Motor (NYSE: F) has announced that it will be significantly boosting fourth quarter production.

There has been a lot of debate over whether or not the "cash for clunkers" program is good for the economy, but there is little debate as to its popularity. The program offers up to a $4,500 incentive for people exchanging their old gas guzzlers in for newer, more fuel efficient vehicles, and has been much more popular than anyone could have imagined.

Steve Feinberg made a fortune in distressed investing during the early 1990s. So, when the financial system fell to pieces over the past couple years, it should have boon for his private equity firm, Cerberus.

Not this time. In fact, the New York Times has an extensive piece on the topic, covering Feinberg's folly on the buyout of Chrysler.

Yes, the deal was struck about two years ago, when the private equity market had reached its peak. Debt was easy to get. And, Feinberg thought that there would be lots of opportunities to slash costs (which is easier when a company is private).

The domestic automakers have all but given up and declared bankruptcy in an effort to survive in some form. Chrysler is about through its process, and GM is well on its way to becoming a completely new company. The standout: Ford Motor Co. (NYSE: F).

Ford is not only doing much better than the competition (and has been for a few years now), but it's actually increasing auto production while the bankrupt competitors are having a hard time getting rid of old inventory and shutting down dealers.

Former Chrysler CEO Lee Iacocca has decided to weigh in on the current situation at his former employer, when interviewed by the Associated Press. Iacocca believes that the automaker needs to get the government out of the business as soon as possible, noting that government intervention is "strong motivation to repay the loan early." Iacocca added that the government "oversight is just too extreme." He reminded readers how Chrysler repaid the previous ten year loan from the government in three.

Chrysler and General Motors (OTC: GMGMQ) are have both received billions of dollars in government loans. Chrysler has recently exited bankruptcy protection, while GM remains in Chapter 11. The Treasury Department's auto task force has already made its presence felt, forcing out both CEOs and is reshaping their boards.

There's new boss at Chrysler, and his name is Sergio Marchionne. On the job just a few days, Mr. Marchionne has shown that he plans to run a tight ship at Chrysler. His first move was to appoint powerful divisional heads with profit and loss accountability.

He has initiated a top-to-bottom shake-up, naming 23 executives who will report directly to him. Some of the 23 are from Fiat and others were promoted within Chrysler.

The average American family of four has, against its will, invested over $900 in the Detroit auto industry so it's fair to ask: Will we be getting our money back?

President Obama's auto task force told lawmakers yesterday that there is a "reasonable probability" that the federal government will be paid back. I don't buy that and here's why: Liquidation analysis of GM suggests that there would be just $10 billion in net proceeds from a liquidation. Given that the government has $80 billion invested in the industry with little collateral, long-time money losers like GM and Chrysler will need to earn spectacular returns on equity to pay back their loans. I just don't see it happening. Do you?

Well, you knew it had to happen since Uncle Sam effectively owns Chrysler and General Motors. The U.S. House of Representatives is trying to pass a bill that would mandate the large automakers honor existing franchise agreements and put off dealer closures. The Dow Jones Newswire article quoted Bailey Wood, a lobbyist for the National Automobile Dealers Association, with the following doozy: "Closing dealerships will not make either Chrysler or GM any more viable, and Congress is realizing that," Wood said.

That the politicians are getting involved in operational decisions is clear evidence of the impending doom for the large auto companies. It's hard enough to exit bankruptcy and restart a business. It's far harder to do so while carrying political agendas on your back.

The U.S. Supreme Court has ruled that Chrysler's sale to Fiat can proceed. Over the past week we thought that Chrysler's bankruptcy was almost over. But then a group of Indiana pension funds filed suit with the court to delay the sale.

At issue was $42 million of $6.9 billion of secured debt. The pension funds held that Chrysler's offer of 29 cents on the dollar violated their creditor rights.

A United Auto Workers union health care trust, a more junior unsecured debtor, would receive 55% equity stake. This deal was much more favorable than the offer to the Indiana pension funds.