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March 30th, 2009
12:29 PM ET

Last chance for GM and Chrysler?

[cnn-photo-caption image= http://i2.cdn.turner.com/cnn/2009/images/03/16/minding_your_busi_art.jpg caption="CNN Business Correspondent Christine Romans is Minding Your Business everyday here on amFIX"]

This may be the LAST last chance for GM and Chrysler.

You remember the huge outcry last year over taxpayer millions going in low-interest loans to two of the Big Three. (Ford is also struggling with a crushing decline in consumer car demand, but has not taken any taxpayer loans.) They were given until this month to prove "viability." The President's auto task force says they failed that test.

GM's CEO is out. GM gets 60 days of financing to figure out how to speed up its transformation from the old GM into a lean, mean, competitive machine.

Chrysler gets 30 days of financing and is told to tie up with Fiat. The message from Washington is: Chrysler cannot survive alone.

So this is how we stand on the auto industry bailout and your money.

Your tax money
Taxpayers have spent $17.4 billion on low-interest loans to GM and Chrysler. The hope was the companies could be stabilized and taxpayers could be paid back with a little interest. The White House is now holding open the threat of a "structured bankruptcy."

Your car
The government will guarantee the warranties of GM and Chrysler cars, so buyers today do not need to worry about coverage during this restructuring.

Your job
Some 60,000 hourly jobs have been lost at GM in the past 2-1/2 years. The trick of this bailout, if it continues, is how to balance more job losses and sacrifices for everyone involved in the auto industry. I am afraid more jobs will be lost.

And finally: to the populists out there crying in their beer because the administration gets tough with an auto CEO but not with Ken Lewis of Bank of America, Vikram Pandit at Citi or the other banks, well, consider this. The government has replaced the CEOs of AIG, Freddie and Fannie and ordered an almost entirely new board at Citi. The two situations are different and being handled differently, but make no mistake, the White House is shaking up management in the failed financial firms, too. It just has not replaced a bank CEO. Yet.


Filed under: Minding Your Business
soundoff (5 Responses)
  1. J.L. Galloway

    When will the republicans in washington give some of their salery, take a reduction in their retirment and start paying for their health insurance? I think we are suppost to lead by example.
    J.L.

    March 31, 2009 at 4:14 pm |
  2. nancy

    yes, why should Mr. Wagoner "worry" about being ousted? He's walking away with a $20 mil "package."

    What are the laid off GM workers walking away with?

    March 31, 2009 at 9:07 am |
  3. Jerry

    Here we go again – Wagoner 20M?? What for?

    March 31, 2009 at 6:30 am |
  4. Deana

    Unfortunate, but will hopefully make GM stronger and more nibble to keep up with today's needs/requirements.

    March 30, 2009 at 9:57 pm |
  5. mcdonaldburke

    Sad that such a storied industry is dying right before our eyes. It could have been avoided.

    March 30, 2009 at 1:13 pm |