Treasury says no aid for GM, Chrysler

Merger between two automakers appears to be off until after the election, as Treasury says it will not provide the Detroit companies with aid, the Detroit Free Press reported.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By David Goldman, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- A merger between U.S. automakers General Motors Corp. and Chrysler is likely on hold until after next week's presidential election, as the U.S. Treasury Department said it will not provide the automakers with aid, the Detroit Free Press reported Friday.

GM had asked the Bush administration and Congress for a loan of about $10 billion to help keep the struggling company operational. It said that it could possibly use the aid to fund a merger between it and Chrysler, which is owned by Cerberus Capital Management.

Many experts have said both companies would need to merge to stop their recent bleeding. GM (GM, Fortune 500) has only about $21 billion in cash and Chrysler has $11 billion, although most of that was borrowed.

GM said Wednesday that overall sales were down 11.4% worldwide in the third quarter compared to the same period a year earlier. With auto sales plummeting globally, analysts say the merger would save the companies billions of dollars in redundant expenses.

But that would also mean tens of thousands of jobs lost. Analysts have estimated that the total job loss in a GM-Chrysler merger could be as high as 90,000.

Furthermore, the Treasury is currently strapped with nearly $3 trillion in Federal bailout and credit liquidity programs aimed at stemming the recent financial crisis gripping the U.S. economy.

After news broke that the government would not provide the companies with aid, the Michigan Economic Development Corp. canceled a meeting of local governments to discuss the possible merger, the Associated Press reported.

The Treasury, GM and Chrysler could not immediately be reached for comment. To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
Novelty gifts for people with money to burn For those who've got the cash, these holiday gifts can really make a statement. More
The best stocks of 2014 This year has been very solid for stocks, but these 6 were the best of the S&P 500. More
14 biggest tech fails of 2014 2014 was chock-full of big failures in technology, from security snafus to executive gaffes. Here are the top ... er ... bottom 14. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.