The auto bailout/nationalization get weirder/scarier with each day. It seems now that plans are afoot to combine GMAC and Chrysler Financial.

From the WSJ:

The likeliest outcome is that Chrysler Financial’s loan portfolio will be folded into GMAC, which would then handle dealer financing for both General Motors Corp. and Chrysler, these people said. Such an arrangement will require approval from various federal banking regulators in Washington, they said.

One option that is not under serious consideration is an outright merger between the two automotive lenders, these people said.

The article in the Journal is pretty short an lacking in any hard details but it appears as if Chrysler Financial which is not a part of Chrysler does not have the financial capacity to support Chrysler’s sales. Currently they receive about $150 million a week from the Treasury. Apparently, the government wants to end this subsidy.

The piece of the article I excerpted is confusing at best. It implies that GMAC will take over the financing for both companies but that there wouldn’t be a merger. So what happens to Chrysler Financial? Does it just vanish? And how does all of this shake out with Cerberus? I believe it still owns both entities though they are deeply in hock to the feds. More questions than answers right now.

Is the real end game here for Chrysler to end up as a GM product line or for that matter to eventually merge into GM. Financing drives sales as much or more than product these days, so it’s hard to see how one could truly call these two companies competitors once and if this amalgamation takes place.

By the way, didn’t the Justice Department used to look skeptically at these sorts of arrangements?