Auto Mess Creating Strange Bedfellows

First, there's the question of how much money is really needed. The bill would have allotted $14 billion in loans, but most think the amount needed to avoid imminent bankruptcy is smaller, probably in the $5-10 billion range. This makes it doable using some combination of government guarantee and, perhaps, private lending.

Here's the range of ideas being discussed on Wall Street this morning:

1) Can the TARP be used for an auto loan? There is about $15 billion left in the TARP. But if GMAC was determined not to have enough regulatory capital required to be considered a bank, under what pretense does GM qualify? How to get around this? The Street thinks some rationale will be created.

2) Private syndicate loans. There's talk that large financial institutions (Citigroup , JP Morgan , Goldman Sachs , and others) might lend emergency funds to the auto companies if the government guarantees the loans. The theory here is that it would be in the interests of the financial firms to form a syndicate.

Bottom line: the hope is that the Treasury will either 1) lend directly to the auto companies, or 2) use a small part of the TARP money (maybe just a few billion) to backstop loans ($5 to $10 billion, perhaps) made by a private syndicate.

P.S. Where's Bernanke? Out on the horizon is Ben Bernanke, who has emergency powers of the Federal Reserve; traders are saying in theory it is possible for him to act as a lender. Presumably, the loans would be collateralized.

- The Dow 30 at a Glance

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