As the White House weighs the latest emergency loan requests from General Motors and Chrysler, it’s quickly becoming apparent that the rescue of the Big Three auto makers could eclipse $100 billion — more than five times the amount of loans they have already received.
Mark Zandi, who told Congress last year the bailout could ultimately cost as much as $125 billion, told FOX Business he stands by that forecast.
Zandi said he thinks lawmakers are aware of the enormous price tag but not necessarily the general public.
“I think they’re coming quickly to the realization it’s going to cost a lot of money. But everyone is becoming unnerved to these numbers,” said Zandi.
White House officials and restructuring experts continue to debate whether GM and privately held Chrysler should file for Chapter 11 bankruptcy protection in order to be in a better position to gain concessions from unions and bondholders.
“One way or the other taxpayers are unfortunately going to pay, whether they pay to nurse them through this period or in bankruptcy” that will result in a weaker economy, said Zandi.
A government-financed bankruptcy appears to be gaining some steam, as The Wall Street Journal reported Monday the Treasury Department is urging banks to line up $40 billion — the largest bankruptcy loan ever — in case a Chapter 11 filing is deemed necessary.
“I sense the attitude towards some type of bankruptcy restructuring — either in Chapter 11 or some special flavor of bankruptcy… is softening both in Washington and in Detroit,” Paul Ingrassia, Pulitzer Prize winner and author, told FOX Business.