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Obama Auto Task Force: GM, Chrysler in Merger Talks in 2008

November 24, 2009
2 min to read


WASHINGTON - Detroit's Big Three automakers came closer than America realized to becoming the Big Two, according to reports by The Detroit News.


General Motors Corp. ended merger talks with Chrysler LLC in November 2008 to focus on getting emergency federal aid, but Chrysler continued to believe a tie-up with GM was its best chance for survival.

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In April, as both automakers were surviving on government aid and fighting bankruptcy, Obama administration officials spent two weeks working on a plan for GM to acquire Chrysler's best assets and keep the doors open on a third of its factories.

Some members of President Barack Obama's auto task force saw it as a fallback position if Chrysler failed to reach a partnership deal with Italy's Fiat SpA. Other members opposed it. But top task force officials ultimately decided it was too late in the game for a merger, too complicated and would cost too many jobs compared to an alliance with Fiat.


The GM-Chrysler tale is among new details that emerged in Detroit News interviews with more than a dozen insiders -- automakers as well as government officials -- over the past two months.


They reveal the much greater government role in the historic bailout of both companies than has been disclosed previously.


Faced with the prospect of losing 1.1 million direct and indirect American jobs, as well as a major leg of the nation's economy, the government believed it could not afford to let the industry fail.

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In the end, the GM and Chrysler bailout resulted from fortunate timing and the work of a group of unknown Wall Street veterans. Under the aegis of the White House, and without congressional approval, they forced a restructuring that the automakers themselves had been unwilling or unable to accomplish -- even as they saw disaster looming.


Among the other revelations from those inside the auto industry bailout:

  • The White House auto team negotiated with billionaire investor Carl Icahn to buy parts supplier Delphi Corp., but the deal wasn't sweet enough for him to sign on. Delphi is now in the hands of its bankruptcy lenders.

  • GM told the government it couldn't exit bankruptcy in the end of August or September, but was pressured by the task force to exit in early July.

  • GM asked the United Auto Workers to freeze the hourly pension plan; the UAW refused.

Topics:Industry

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