General Motors and Chrysler could be in worse trouble than either company has let on, which, given the acknowledgement of both manufacturers that bankruptcy is a genuine danger, is really saying something.
To date, the two companies have received US$17.4 billion in government aid, and both are hoping to receive an extra $21.6 billion between them.
The US Treasury?s chief auto adviser, Steve Rattner, has since said that the loans might need to be ?considerably? larger.
In a recent interview on Political Capital with Al Hunt, Rattner said ?It could be more, I can?t rule that out,? and went on to describe GM?s and Chrysler?s turnaround plans as ?somewhat ambitious? and ?probably optimistic.?
GM and Chrysler have both described their plans as ?realistic? and ?conservative.?
Rattner warned that the current negotiations between GM and UAW union representatives, as well as debt holders ? which could see GM forced into bankruptcy if the talks fail ? will need to end soon, and may require an official deadline.
?Part of why there?s a lack of appearance of movement is nobody wants to go first,? he said. ?You say here?s the deadline, everybody has to get there by this date or we?re going to do something else.?
Rattner said that by March 31, the government will make clear what the timetable is to be, when it has to happen by, and what it expects from the talks and the involved parties.
In defence of the two manufacturers ? under fire from the tax-paying public ? Rattner stressed that GM and Chrysler CEOs Rick Wagoner and Bob Nardelli have been ?exceptionally cooperative,? ?energetic? and ?thoughtful? participants.
?They?re good guys really trying hard to run those companies. I have nothing bad to say about them.?
US President Barack Obama is relying on the government?s ?Automotive Task Force? to determine whether GM?s and Chrysler?s requests for further aid should be approved, or if the two ailing carmakers need to be forced into bankruptcy.
?Chapter 11? bankruptcy in the US is a reorganisation tool, wherein companies are allowed to continue trading, maintaining possession of their assets, and restructuring the business into a successful, profitable organisation once more.