Car Czar Says GM And Chrysler Underestimate Cash Needs

Here’s some surprising news. Steven Ratner, the chief auto adviser to the Treasury, said that the auto companies may need considerably more money than they indicate in the plans presented to the government.

 Here’s how Bloomberg TV reports it: 

General Motors Corp. and Chrysler LLC, which have requested as much as $21.6 billion in additional government aid, may need “considerably” more than that, said Steven Rattner, the Treasury’s chief auto adviser.

“It could be considerably higher, I won’t deny that,” Rattner said, when asked whether U.S. aid sought could rise. Rattner spoke in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” scheduled to air today.

“What they’ve asked for depends on them achieving plans that are somewhat ambitious,” Rattner said. “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.”

Greg Martin, a GM spokesman, said today its restructuring plan has “a conservative outlook.” The company will continue working with the task force “and we’ll keep them informed of our liquidity needs,” Martin said in an e-mail.

Chrysler said in a statement its plan is “realistic” and “conservative.”

“With the remaining $5 billion loan request, Chrysler is viable,” the company said.

Well we are all now unfortunately not at our first rodeo. We’ve heard this one how many times before? At least Ratner isn’t trying to pull the wool over any one’s eyes. I suspect he’s watched enough Congressional grillings by now to know that zero surprises is the only way to keep ones scalp.

He does mention in the interview that the bondholders and the auto companies have yet to reach an agreement on a debt for equity swap. He said the government is considering placing a deadline on both parties. I think we saw that once before with GMAC didn’t we. Deadlines came and went, no deal was ever reached, the government said never mind and the bondholders got bailed out. Any bets on how this one plays out?

Could we please just use the bankruptcy code this one time. Do we have to keep making the same mistakes over and over again. Somebody please tell me this one will turn out differently.

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