New York (HedgeCo.Net) – Saying that GM is in the “worst shape,” Senate Banking Committee Chairman Christopher Dodd told the struggling automaker that they’ve got to consider new leadership if they want to receive federal aid.  The comments prompted many to believe he was referring in fact to GM CEO Richard Wagoner, whom Dodd said “has to move on,” on CBS’s “Face the Nation.”

President-elect Barack Obama didn’t exactly reaffirm Dodd’s position, but said at a Chicago press conference that if management “doesn’t understand the urgency of the situation and is not willing to make the tough choices and adapt to these new circumstances, then they should go.”

Congress will reconvene this week to discuss the proposed $15 billion rescue plan that would hopefully salvage both General Motors and Chrysler.  Although they are closer to finalizing a plan of action for the troubled companies, they are still met with reluctance from certain individuals. 

Alabama Senator Richard Shelby, who has been outspoken about his disdain for any auto rescue plan, is supporting a filibuster that would put a halt to the legislation and instead prompt a lengthy debate about the issue.

Dodd, however, realizes it is a time-sensitive issue and focused during the interview on the fact that the auto industry could completely sink in the next few weeks if nothing is done.  “Even if people don’t like this idea, none of us want to wake up January 1st and discover we don’t have an industry to save.”  According to the Connecticut Senator, 1 out of every 10 jobs in the U.S. is either directly or indirectly related to the American auto industry.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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Reuters – Chrysler LLC is rapidly burning through cash and being driven to prepare for a possible break-up if it can’t clinch a merger with General Motors Corp or get government funding needed to ride out the economic crisis, people with knowledge of the situation said.

Without new funding or a wrenching restructuring, executives have raised concern about the automaker’s ability to finance its operations from existing cash beyond the first half of 2009, said the sources, who were not authorized to discuss Chrysler’s performance.

Chrysler has had to pay out over $100 million a month to support strained suppliers on top of a total $200 million support to sales through dealers in August and September as it suspended vehicle lease financing, the sources said.

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Reuters – General Motors Corp (GM.N) and Ford Motor Co (F.N) posted more than $27 billion of net losses in the first half of 2008 — and that was before a deepening economic slowdown pushed industry sales beyond 15-year lows.

What either automaker will report for an encore in the third quarter could be overwhelmed by the potential merger of Chrysler LLC into GM or various other scenarios of some or all of the Auburn Hills, Michigan automaker being sold.

Both are expected to post dismal third-quarter results on Friday, capping off a disastrous week that started with reports that U.S. auto sales plunged to the lowest annualized rate in a quarter century in the first month of the fourth quarter.

Analysts on average expect GM and Ford to post losses of roughly $2 billion each for the third quarter excluding one time items, according to Reuters Estimates.

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