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?

You may file this under he can't be serious.

Looking in The New York Times business section, I notice that GM CEO Rick Wagoner skipped on over to Washington with his hat in his hand. It seems that Mr. Wagoner has discovered that the bailout legislation has been written in a manner that would allow him to get some money for his flailing company, General Motors Corp. (NYSE: GM). The funniness starts when you realize that Rick wants some money from the government (read that, us, the taxpayers) so he can finish totally wrecking his company by merging it with Chrysler. Really, the idea is almost too funny to laugh at. It makes me glad that my dad dumped his GM holdings when he did.

The Times' article states: "If G.M. or Chrysler were to go under, tens of thousands of people would be thrown out of work." That may be true in a fashion, but I have news for the Times and Mr. Rick Wagoner: if this merger happens, about 40% of those people now employed by the two companies will probably be out of work anyway. On the other hand, a merger of this sort would effectively pitch the UAW into the street, pretty much for good. Oh, I bet our friend Rick already thought about that.

If anyone who reads this has a chance to talk with GM's CEO Rick Wagoner before he pillages the public coffers to assure his income for a few more quarters, he/she might want to offer him this one little gem of wisdom:

An attractive, quality product, in keeping with the times, would really get your rear out of a jam, Rick.

This post is part of a feature on companies and products that our bloggers think are in need of a makeover. See all 26.

General Motors Corp. (NYSE: GM) will never be the same. The American manufacturing icon is in the worst shape of its life in the past five decades, it's not selling the larger vehicles that have been its bread and butter for years and its stock is absolutely in the tank. It's also shutting down factories as it feverishly tries to reinvent itself. After all, Madonna has done this many times -- so why can't GM?

Okay, that's an unfair comparison. But for long-term survival, companies always need plans to rapidly change with the times, even if the money needed for that flexibility conflicts with the incessant market need for quarterly expectations. After all, like we've seen this week, the market is more emotional than a 14 year-old girl. It always will be. So, what can GM do? It's hard to say, but time is of the essence. Makeover times in this age should take double-digit months, not double-digit years.

Wipe off the dribbling eye shadow, visit Neiman Marcus, and get an extreme makeover -- that's what. Since GM really doesn't have a cash pile like some other blue chip companies, can it pay for a makeover? Doubtful. Can companies reinvent themselves with marketing and image? Sure, this happens all the time.

So where do the CEOs of General Motors (NYSE: GM), Ford (NYSE: F) and Chrysler go when they need to turn their companies around? Are they huddled in their boardrooms in Detroit, planning sales strategies with top executives? Are they cracking the whip in their design studios as they seek to build the perfect car?

Nah. They go where every other corporate bigwig goes when there's trouble afoot: Washington, D.C., home to the world's most dependable source of capital -- the U.S. Treasury.

This week, Rick Wagoner of GM, Alan Mulally of Ford and Bob Nardelli of Chrysler are testifying before Congress as they go fishing for $25 billion in funding to help develop more fuel efficient cars. Now that the SUV craze is over and Detroit has consumed the hundreds of millions in fat profits those trucks produced, the car companies find that they failed to save for a rainy day.

It's more than a little ironic that the one-time powerhouses of the American economy are begging the federal government for help. Major corporations have spent the last 40 years fighting government involvement in the economy -- the Big Three fought government rules requiring seat belts, for goodness sake. And GM played a major role in defeating national health insurance decades ago, among many other sins committed in the name of maintaining the glorious free market. But when they hit a wall, the corporate powers know just where to go -- and it's certainly not to the free market. No, Uncle Sam is a far more reliable source, especially in hard times. So much for free market capitalism.

The only problem is, with the bailout of AIG among others, Detroit may not like its place at the end of the state capital line. And the Big Three had better hope that voters don't start wondering why the government is spending the limited capital of the American people on an industry that is currently dedicated to lowering the wages and eliminating the benefits of its workers.

I certainly don't want to see large American companies go out of business. I just hope that they repay the generosity of the tax-payers with something other than low wages and canceled pensions.

UPDATE: In response to a question in the comments about GM's role in opposing national health insurance, you can start reading about that shameful history in a New Yorker piece by Malcolm Gladwell. Here's an excerpt:

In 1945, when President Truman first proposed national health insurance, they [union leaders] cheered. In 1947, when Ford offered its workers a pension, the union voted it down. The labor movement believed that the safest and most efficient way to provide insurance against ill health or old age was to spread the costs and risks of benefits over the biggest and most diverse group possible. Walter Reuther [the national president of the U.A.W at the time]...believed that risk ought to be broadly collectivized. Charlie Wilson [president of G.M.], on the other hand, felt the way the business leaders of Toledo did: that collectivization was a threat to the free market and to the autonomy of business owners. In his view, companies themselves ought to assume the risks of providing insurance.

If that's too 'liberal media' for you and you need something more academic, try For All These Rights: Business, Labor, and the Shaping of America's Public-Private Welfare State (Princeton, 2003) by Jennifer Klein, a labor historian at Yale. Please send your revised analysis to me after you do a little reading . . .

The New York Times reports that General Motors (NYSE: GM) wants a $50 billion bailout due to the credit crunch. It says it can't get the money it needs to build fuel efficient cars. But during the decade, when it was minting money from SUVs and trucks sales, GM could have invested those profits in fuel efficient products. Now that those profits have evaporated, it wants taxpayers to step in.

What kind of bailout does GM want? The Times reports it seeks $50 billion in government-backed loans to retool its plants to build fuel efficient cars. GM is not alone -- Detroit's automakers and the United Auto Workers (UAW) already requested Congress to "appropriate $3.75 billion to back the $25 billion in loans authorized last year." Now they want to double that amount and are "urging Congress to act by the end of September so that the money can be available next year." No doubt the industry is in trouble. The Times reports that "total sales for [August are forecast to be] 14.4 percent lower than a year ago and that G.M.'s sales [will drop] 27.5 percent."

But the economic logic for this taxpayer-funded bailout is tenuous. GM wants the government to leave it alone when it comes to fuel efficiency and it made huge profits on gas guzzlers before the price of oil shot up from $24 a barrel to $117. Thanks to GM's lack of investment in fuel efficient vehicles, its losses are soaring. Most recently it lost $4.4 billion and its revenues plunged 33% from $29.7 billion to $19.8 billion. It wants our money to make up for its bad management. Since its current CEO, Rick Wagoner, has taken over, GM's stock price has fallen 83%. But he still has the support of GM's board.

With great fanfare, General Motors Co. (NYSE: GM) announced it was spending $500 million developing the Chevrolet Cruze, a so-called next generation compact car. Investors, who have seen the value of GM's stock slip 60 percent this year, could not have cared less. Shares of the company, which for now is the largest automaker, closed down for the day.

Granted one car is not going to revive General Motors' fortunes, but the Chevrolet Cruze clearly is a step in the right direction. For one thing, it's got a nice design though it certainly did not blow me away. The automaker clearly is trying to build on the popularity of the Chevrolet Cobalt whose sales are up 16 percent year to date. It aso underscores how General Motors is trying to be more efficient.

"The Chevrolet Cruze was designed and engineered by our global teams in Europe and Asia Pacific and will be manufactured in those regions in addition to the assembly plant here in Lordstown, Ohio," said Chief Executive Rick Wagoner in a press release. "Our goal for the Chevrolet Cruze is to lead in fuel economy in this very competitive car segment.

But it's also taking a gamble here.

As the Wall Street Journal points out, "The auto maker believes growing demand for nicer, well-equipped small cars coupled with a dramatic redesign for the Cruze will be enough to command sticker prices well beyond the $15,000 base price of a compact Chevrolet Cobalt."

For Wagoner to keep his job, he's going to have to sell lots of them along with the company's pick-ups and SUVs, which the company and consumers are less enthused about.

General Motors (NYSE: GM) posted a $15.5 billion loss in its second quarter. This was much worse than analysts had expected. With its stock opening 8% lower, GM stock has lost 84% of its market value since CEO Rick Wagoner began that job on June 1, 2000. His failure to prepare GM for high gasoline prices, as Toyota Motors (NYSE: TM) has done, makes me wonder whether GM's board is asleep at the switch.

GM's North American results were really bad. The New York Times reports it lost $4.4 billion and its revenues plunged 33% from $29.7 billion to $19.8 billion. But Wagoner has promoted cost reduction plans. In June, Wagoner announced that GM would close four assembly plants making pickups and SUVs by 2010 and cut vehicle production by 500,000. Then, on July 15, he detailed a 20% cut in "salaried personnel costs, the elimination of health-care coverage for white-collar retirees past the age of 65, and cuts in advertising and marketing budgets and capital expenditures," according to the Times.

Some Administration officials have been touting the wonders of a cheap dollar as if that will save our industries from a collapsing domestic economy. They should think again. Meanwhile, it is a testament to Wagoner's board relationships that there have not been calls for a new CEO. There is absolutely no way that GM can cut its way to prosperity. He has led GM into a situation where his choices are to cut costs or to file for bankruptcy. During the booming SUV and truck years, Wagoner could have invested the profits in energy efficient vehicles.

His failure to do so has jeopardized GM and should end his role as its CEO.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

General Motors Corp. (NYSE: GM) shares fell in early trading as Wall Street viewed the company's announcement that it plans to raise as much as $15 billion through the end of next year by suspending its dividend, cutting its salaried workforce and selling assets with skepticism.

For one thing, who is going to want to buy the assets GE is trying to sell? For instance, sales of Hummer were down about 60% in June. What private equity player will take a chance on buying a brand synonymous with gas guzzling as gas sells for more than $4 a gallon at the pump? Who is going to want other lackluster GM brands like Saturn? Any new owners of the business will face the same problems as GM.

Also, let's not forget the rising prices of commodities used to make cars, such as steel. Hyundai Motor Co. announced today that it was raising prices on its cars because of increased costs for raw materials, according to Reuters. Soaring oil prices also is making the costs of plastics needed for car parts rise.

General Motors Corp. (NYSE: GM) CEO Rick Wagoner told the media this week that there would be no bankruptcy for the beleaguered automaker. While GM and rivals wind down SUV production and see what they can do with the glut of big, gas-hogging trucks in inventory, Wagoner assured the world that GM would not be shutting down any of its brands as a result of its current financial difficulty.

And then came the standard, boring corporate speak from Wagoner when he said that the company's focus is on evolving its various brands to make them more profitable and meet consumer needs.

Well, duh. Isn't that the SOP for every automaker during every quarter? GM has not marketed itself well to the gas-conscious crowd nor was it in a position to change its product mix swiftly as consumer attitudes towards gas efficiency changed almost overnight.

With GM shares trading for under $10 now -- the lowest price in about 50 years -- the company can't spin more rhetoric. It's put up or shut down time. That is, unless gas prices go down and the economy improves. I won't take that bet with anyone for the foreseeable future. Will you?

MAJOR PAPERS:

• Rick Wagoner, the CEO of General Motors Corporation (NYSE: GM), hit out against allegations that the auto maker may soon file for bankruptcy and said he believes the company's financial position will "remain robust" for the rest of the year. Wagoner also said, the Wall Street Journal reported, that the company has no plans to sell or reduce more of its brands.
• An independent Yahoo! Inc (NASDAQ: YHOO) would be better for the world, Google Inc (NASDAQ: GOOG) CEO Eric Schmidt said and the Financial Times reported. Yahoo! will be able to create more competition in the search market and other advertising markets if it stays independent, Schmidt contended.

OTHER PAPERS:

• According to people briefed on the plan, the New York Times reported that senior Bush administration officials are weighing a plan to have the government take over either Federal National Mortgage Association (NYSE: FNM), or Fannie Mae, or Federal Home Loan Mortgage Corporation (NYSE: FRE), or Freddie Mac -- or both -- and place them in a conservatorship if their problems continue or worsen.
• The New York Times also reported that people briefed on the matter said Anheuser-Busch Companies Inc (NYSE: BUD) is in active talks to sell itself to InBev in a friendly deal, despite previous hostility to the idea. One person said InBev indicated it may be willing to pay more than the $65 per share originally offered.

The Wall Street Journal was good enough to humiliate General Motors (NYSE: GM) CEO Rick Wagoner by pointing out that he still has his job. The company's share price is down almost 85% since he took over. The newspaper writes that Mr. "Wagoner's decision a few years ago to tilt GM's product mix more toward trucks and SUVs isn't looking good."

Fair enough. But there are two critical elements to Wagoner still having his corner office. One is that the rest of the US car industry is as bad off as GM, maybe worse. The other is that no CEO in his right mind would leave a good job to take over GM. Boeing (NYSE: BA) exec, Alan Mulally, moved to Ford (NYSE: F) as the head man and he must regret the decision every day.

Wagoner is part of the "dumbing down" of the American CEO. If the man can't do well, blame it on the industry. That makes it seem that individual companies are powerless to make decisions that will put them ahead of the competition, even in tough markets.

Tell that to the guys at Honda (NYSE: HMC).

Douglas A. McIntyre is an editor at 247wallst.com.

General Motors' (NYSE: GM) CEO Rick Wagoner has been kicked upstairs [subscription required], according to the Wall Street Journal. He will focus on international expansion and advanced technology. Not much of a job for a chief executive. Frederick Henderson will take over as COO and run the company's daily operation.

Wagoner's sin was that he could not launch products that would get GM back some of its market share in the U.S. He was able to cut costs and get an improved deal with the UAW, but GM's January sales were down over 12% in its home market. Its share in America is only about 25%. Toyota (NYSE: TM) has muscled GM out of its lead in small and mid-sized cars.

At this point, it does not matter who GM puts at the top of the company. There is a race between the company's growing sales overseas and its falling prospects in the U.S. But multi-billion annual losses in North America cannot be offset by the rest of GM's operations.

GM's stock is back near a multi-year low. The company began losing its war in the U.S. a decade ago and that can't be reversed by new management.

Douglas A. McIntyre is an editor at 247wallst.com.

Rick Wagoner, the CEO of General Motors Corp. (NYSE: GM), continues to batten down the hatches at the world's largest automaker. Sales in 2008 are predicted to be fairly weak, and this isn't helped by the fact that the automaker's dealer network could be compared to McDonalds Corp. (NYSE: MCD): so many locations that they seem to be on every corner.

Wagoner needs to fix that, and the CEO said this week that its U.S. consumer sales network was not shrinking enough to correlate with the sales slowdown and product mix shift it's been experiencing. Hence, many dealers will need to consolidate faster than they have been, with the focus on combining Pontiac, Buick and GMC dealerships into one channel.

Although facing a slowdown in U.S. vehicle sales this year, General Motors Corp. (NYSE: GM) appears to have enough money to keep operating during the first half of 2008 without reaching into deep credit to finance itself. In fact, it has eliminated a $4.1 billion credit line because it has enough money to stay afloat through June of this year.

GM never borrowed money under the credit line it canceled. Even so, eliminating $4 billion in credit does not mean everything will be rosy for the automaker in 2008. GM Chief Rick Wagoner said this week that the largest automaker in the world does not expect to generate more money than it uses in 2008. That means that the company will probably not see a profit this year, though there is the possibility of a few small quarterly profits if sales outpace predictions.

GM has about $30 billion in cash, so the automaker is not hurting for money to fund itself even as it tries to increase its growth presence in markets outside the U.S. and make more fuel-efficient vehicles that customers will snap up (or so it hopes). Mark Altherr from Credit Suisse said that "GM put this in place in the summer as additional liquidity, if needed, in the event of a longer-term work stoppage during the UAW negotiations." This is most likely true -- and now that those UAW negotiations are complete, access to outside capital funding through credit can safely go away.

General Motors Corp. (NYSE: GM), Ford Motor Co. (NYSE: F), DaimlerChrysler AG (NYSE: DCX) and the United Auto Workers just can't stop complaining about new, tougher fuel-efficiency standards that the U.S. Congress likely will pass.

The companies and union are taking their case to Capital Hill today at a private luncheon with leaders of the U.S. Senate to convince them to reconsider an overhaul of Corporate Average Fuel Efficiency (CAFE) standards, according to the Associated Press.

Let's hope that Senate Majority Leader Harry Reed has the guts to tell them to pound sand. The public is fed up with high gas prices and the growing problem caused by global warming. Even GM Chief Executive Rick Wagoner has acknowleged this reality, though the AP quotes him cryptically saying "let's make sure that we also fix the real problems while we're doing that."