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Behind The Wheel

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Oct.31

9:03 AM ET

Friday, 31 Oct 2008

Like Charlie Brown, No "Candy" For GM/Chrysler On Halloween

Posted By:Phil LeBeau

Topics:Congress | Economy (U.S.) | Automobile Industry

Sectors:Automobiles and Parts

Companies:General Motors Corp

Charlie Brown
AP
Charlie Brown
Rick Wagoner meet Charlie Brown. GM's Chairman and CEO now knows how the cartoon character felt getting a box of rocks for Halloween.

It looks like Washington/Bush Administration is saying "no thanks" to providing the money needed to make a GM[GM Loading... () ]/Chrysler merger happen. Good grief!

What happened? Two things are likely making the folks in Washington hesitant to help. First, lending $10 billion to a deal that would lead to 30,000-40,000 jobs being cut is tough one to swallow. Yes, the cost of not lending could ultimately be greater, but is that what they are thinking about at the Treasury Department? My guess is no.

The second issue is whether Treasury is balking at lending money to a deal that will eventually help Chrysler's owner Cerberus Capital. In general, Washington is not gonna be a fan of lending money to a private equity firm. Throw in the fact the firm's chairman is a former Treasury Secretary and that Cerberus' leadership includes former Vice President Dan Quayle, and you see how this looks like the ultimate inside deal. Not a good message for the Republicans to send just days before an election.

Major Issues Overcome in GM-Chrysler Talks: Sources

GMAC, Ford Get Access to Commercial Paper Plan

All that said, I still expect that Washington/GM/Chrysler/Cerberus figure out a way to make this happen. The pressure is growing with political leaders in the Midwest clamoring for something to be done to keep Chrysler from imploding.

And after Tuesday's election, the folks at Treasury and in the Bush administration can take the approach that they will soon be out of Washington, so the political fall out of a loan falls considerably. Too bad there's no Great Pumpkin to give Rick Wagoner and Bob Nardelli what they want.