Cerberus chief: Country can't let automakers fail

DETROIT - A top official of the company that owns most of Chrysler LLC says the country needs an economic stimulus package and must make sure the U.S. auto industry doesn't fail.

Cerberus Capital Management LP Chairman John Snow said Wednesday that president-elect Barack Obama and his treasury secretary need a bipartisan plan to counter the worst economic downturn in about 50 years.

"What we need is to make sure that a vital industry like autos ... which is such a big part of the overall economy, doesn't lead us into a deeper and harsher downturn," Snow said in an interview on the CNBC cable channel. "The collapse of the auto industry at this time would be devastating for a new president."

Cerberus, a New York private equity firm that owns 80.1 percent of Chrysler, is in talks with General Motors Corp. about GM acquiring Chrysler. GM reportedly is after Chrysler's roughly $11 billion cash stockpile and is seeking federal aid to make the deal happen.

Snow, who served as treasury secretary under President George W. Bush from 2003 to 2006, said the economy likely is in a recession that could be serious and long due to the credit crisis and a severe economic contraction in and out of the U.S.

GM and Chrysler have been holding talks to combine their operations in order to survive a punishing economic climate, sliding auto sales and a lack of access to credit for many consumers.

GM is burning through more than $1 billion per month and analysts have said the company could reach the minimum cash levels required to operate sometime next year. They say Chrysler could go into bankruptcy next year if it doesn't take on a partner or isn't acquired by another automaker, raising the specter of tens of thousands of lost jobs or the need for the government to take over the company's pension obligations.

GM has been lobbying the Bush administration for at least $10 billion to help the company maintain its operations and finance a deal with Chrysler. GM could use some of the funding to shut down redundant Chrysler operations.

Obama has said that he would quickly meet with the leaders of the U.S. automakers and the United Auto Workers union, a sign that he could exert influence on the process during the presidential transition.

GM and its allies in Congress have urged the Energy Department to expedite $25 billion in loans to help the industry retool assembly plants to build fuel-efficient vehicles. GM could access a portion of the funding. Lawmakers also are considering doubling the loan funding and reviewing other options to help the industry.

GM, in a statement issued Wednesday, said it welcomes Obama's pledge to support the domestic auto industry and efforts to develop new technology.

"This support comes at an especially critical time as our industry confronts one of the most difficult economic periods in our nation's history, caused by the global financial crisis," the statement said. "This support will enable a competitive U.S. industry to contribute significantly to our nation's economic revival."

A GM-Chrysler deal could lead to job cuts of 24,000 to 35,000, according to industry analysts. They have predicted GM could close half of Chrysler's 14 manufacturing plants and consolidate engineering, design, finance and other operations. Another 50,000 auto supplier jobs could also be lost.

Most of the losses would be in Michigan, but analysts say the alternative of Chrysler being sold in pieces would result in many more job cuts than a GM acquisition.

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