At Insistence of Testy Lawmakers, GM and Chrysler Reconsider a Merger

Just before the Big Three automakers were due to testify on Friday, in the second of two days that could determine their future, a coalition of auto suppliers, dealers and others staged a rally near the steps of the U.S. Capitol in support of their effort.

The rally, sponsored by The Engine of Democracy, was held to "counter misinformation about the vital role the domestic auto industry plays in the U.S. economy," said the coalition in a statement on Friday. Participants wore a red, white, and blue sports jersey emblazoned with the number of auto-related jobs at risk around the country.

At a U.S. Senate hearing Thursday, the CEOs of Chrysler and GM were urged to reconsider merging. The argument by lawmakers was that such a merger would allow the automakers to restructure jointly, thus using less federal money than they would require individually. The move would also speed industry consolidation.

One Ford executive described Thursday's hearings in a phone conversation with Inside Line as "brutal."

In one notable exchange, Sen. Robert Corker, a Republican from Tennessee, told Chrysler chairman Robert Nardelli that the best thing "is for y'all to go away as a stand-alone entity." Corker wondered why taxpayers should loan Chrysler money when its owner, Cerberus Capital Management, won't. Nardelli told lawmakers that if Chrysler gets federal aid, it won't be sold to a foreign company, if that's what Congress orders.

After Thursday's hearings, Senate majority leader Harry Reid, House speaker Nancy Pelosi, Senate Banking Committee chairman Chris Dodd and House Financial Services Committee chairman Barney Frank sent a letter to President Bush urging him to provide limited, temporary assistance to the domestic auto industry during the financial crisis.

"It is already clear that action should be taken by the federal government to facilitate the implementation of these restructuring efforts and prevent the severe impacts to our economy that would result from the bankruptcy of one or more of these companies," the letter said.

The letter also noted that "Congress may consider legislation to provide assistance to the domestic automobile industry next week."

Inside Line says: The automotive soap opera continues today, and the Big Three CEOs are expected to hit even more bumps in the road as they beg Congress for funds. — Anita Lienert, Correspondent