GM and Chrysler May Need More Loans Than Originally Thought

Here is some sobering news for the day. According to an auto panel chief, both GM and Chrysler could need "considerably" more money than the $21.6 billion in loans requested to date. The obvious question is, "When will the borrowing end?" Will these two automakers ever recover from their current plight?

From Automotive News:

The co-leader of the U.S. auto task force said General Motors and Chrysler may need "considerably'' more than the $21.6 billion they're seeking to stay afloat, Bloomberg News reported.

"It could be considerably higher; I won't deny that," Steven Rattner said in an interview on Bloomberg Television's "Political Capital with Al Hunt" program, scheduled for broadcast later today. He made the comment in response to a question about whether the aid sought could rise to as much as $30 billion or $40 billion.

The task force is scheduled to decide by March 31 if GM and Chrysler merit more help. GM has received $13.4 billion in loans so far and seeks $16.6 billion more; Chrysler has tapped $4 billion and says it needs an additional $5 billion.

"What they've asked for depends on them achieving plans that are somewhat ambitious," Rattner was quoted as saying. "Like all management teams, they tend to take a reasonably, slightly perhaps, optimistic view of their business. So it could be more. I can't rule that out."

Rattner, a financier, and Ron Bloom, former assistant to the president of the United Steelworkers union, are the two senior advisers on the auto panel.

Rattner was also quoted making comments on these issues:

Setting a deadline for concessions "Part of why there's a lack of appearance of movement is nobody wants to go first." "You say here's the deadline, everybody has to get there by this date or we're going to do something else."

GM bondholders "The government cannot solve everybody's problems, and we need for the bondholders to become part of this in a constructive way."

Chrysler's future, and its proposed alliance with Fiat "We have not made a determination on whether they could exist on a stand-alone basis, but we do find their idea of partnership with Fiat a worthy idea to consider."

GM CEO Rick Wagoner and Chrysler's Robert Nardelli

"They're good guys really trying hard to run those companies."

"I have nothing bad to say about them."