Sources close to the talks between General Motors and Cerberus Capital Management LC over the potential sale of Chrysler LLC to GM said that, as the discussion continued through the weekend, the deal may hinge on the viability of federal support to help offset the $10 billion in debt that would occur due to the transfer of ownership.
Michigan’s governor, Jennifer Granholm, is seeking help from other governors to obtain $25 billion more for the industry, reports the Detroit News. Analyst David Cole of the Center for Automotive Research in Ann Arbor, Michigan, says that should GM or Ford collapse in the long run, more than 2 million jobs across the country will be eliminated.
The United States Congress has already approved $25 billion in loans. Senator Barack Obama, the Democratic presidential candidate, said that he supports doubling that amount in the near term. Senator John McCain, the Republican presidential candidate, said on NBC’s “Meet the Press” that he takes the more conservative standpoint of disbursing the $25 billion currently promised before the industry seeks more money.
No official announcement has come from Cerberus, General Motors, Chrysler or even Renault- Nissan – the other party to have submitted a serious offer for a stake in Chrysler – over the fate of the Auburn Hills, Michigan, carmaker.
