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October 18, 2008

Bankers push GM-Chrysler deal

For several reasons, both those mentioned in the story and others I can think of.

First, the combined GM, as I assume it would be named, would have both GM’s nshare of 25 billion in federal loans and Chrysler’s. Second, it would reportedly have access to an $11 billion cash horde (via Cerberus, I presume) now in Chrysler’s hands.

Reasons beyond that?

Liquidity for GMAC (which vastly expanded into mortgages from its start in auto financing) to finance auto loans for buyers.

A sense of urgency by the bankers that this needs to be done ASAP, perhaps?

But problems exist. The story notes some, such as corporate culture differences and the need to consolidate dealers.

I can think of more. A combined GM-Chrysler would need to shutter even more plants to have the economies of scale actually produce anything. BUT… that would leave it on the hook for state and local property taxes on even more shuttered buildings.

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