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Auto Makers' Fate: A 'Disorderly Bankruptcy'?

General Motors
CNBC.com
General Motors

As Detroit waits to see how much financial help it will get from the White House and how that aid will be structured, we keep hearing one thing over and over. The Bush administration wants to avoid a "disorderly bankruptcy" in the auto industry. This is not good news for GM and Chrysler.

When the Bush administration announced on Friday that it would make sure the auto industry didn't collapse, Detroit breathed a sigh of relief. After all, there was the implication GM and Chrysler would avoid bankruptcy. Now, that's not entirely certain. The White House says it's looking at a number of options, including some type of "pre-packaged bankruptcy."

So is this really a possibility? Could we see GM and Chrysler go into chapter 11? The answer to both is yes.

It's clear President Bush and Treasury Secretary Hank Paulson are extremely reluctant to give $14 billion to the automakers. So they are looking at a number of options for how to keep GM and Chrysler from going under without having to us the last $15 billion in the TARP fund. Like everything else swirling around this process, it's political.

    • Bush Warns Automakers A Deal Is Not Imminent

So Detroit waits. Those of you who have e-mailed me saying GM and Chrysler should go into bankruptcy are likely watching this play out and saying to yourselves, "Good. We shouldn't bail them out."

Meanwhile those of you who think Detroit automakers should be kept from going bankrupt are wondering why Washington keeps talking about but not acting on a bailout. Happy Holidays Motown.

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