Momentum is building in Washington to aid wounded U.S. automakers with cash to help their finance arms and possibly even money to help seal a deal for General Motors Corp. to acquire Chrysler LLC.
The Energy Department is trying to free up $5-billion of a $25-billion federal loan package to help make the GM-Chrysler deal work, the Wall Street Journal reported on its Web site Monday.
And the White House said Monday that the financing arms of the automakers might be eligible for federal help under the bank stock-purchasing portion of the $700-billion financial rescue package.
Officials "at the highest levels" of the Treasury, Energy and Commerce departments have talked to top auto executives on the topic, presidential spokeswoman Dana Perino said.
"It's a possibility that they could qualify under it," she said.
All three automakers are burning up cash as the U.S. auto market downturn continues with no end in sight. Analysts say GM and Ford are spending more than $1-billion per month more than they bring in, while Chrysler's figures are unknown because it's a private company.
The government has an interest in making sure automakers survive because of huge pension plans that it would have to cover, and the huge number of jobs that could go away if one of the companies goes bankrupt.
Chrysler employs about 49,000 in the United States and has roughly 125,000 pensioners. GM has 177,000 U.S. workers and around 500,000 people receiving pensions.
For each auto manufacturing job, there are 7.5 jobs with parts makers and other companies, according to the Center for Automotive Research in Ann Arbor. Chrysler alone accounts for 318,500 to 392,000 jobs, while GM and Ford account for 2-million each, the center said.
David Cole, the center's chairman, said the industry may need $15-billion to $20-billion in unrestricted federal aid to stay afloat long enough to outlast the economic downturn and take advantage of an auto sales resurgence.
"You're looking at a rather nominal amount compared to the cost of a failure," Cole said.