GM (GM) Wants A Loan From Uncle Sam

Uncle_samSeveral reports indicate that GM (GM, Ford (F), and Chrysler are approaching the government for a total of $25 billion in loans at interest rates as low as 4.5%. The money could come in the form of loan guarantees.

Perhaps Toyota (TM) could borrow some cash as well.

The move to get fresh capital at a low rate is being championed by powerful and aged US Congressman John Dingell, a man who never saw a piece of pork he did not like.

The possibility of the loans raises several questions, the most important of which is what will happen to the holders of common stock in the two public car companies. If the plan allows them to hold their shares without penalty, holders of Fannie Mae (FNM) and Freddie Mac (FRE) shares might be a bit put off.

As the government bail-out option spreads from industry to industry as the economy worsens, the debate about whose oxen will get gored is going to become violent.

Douglas A. McIntyre

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