GM shares tumble as US government ponders aid to auto industryNovember 11th, 2008 - 11:10 am ICT by IANS
New York, Nov 11 (DPA) As Washington openly debated help for the beleaguered automobile industry, shares of General Motors plunged as much as 31 percent Monday as a Deutsche Bank AG analyst speculated the shares may be worthless in a year.”Even if GM succeeds in averting a bankruptcy, we believe that the company’s future path is likely to be bankruptcy-like,” Deutsche Bank’s Rod Lache was quoted by Bloomberg financial news service as saying.
The warning comes just days after GM, the country’s largest automaker, warned that it was running out of the minimum cash it needs to operate until the end of the year and posted third-quarter operating losses of $4.2 billion.
Congressional leaders Saturday joined president-elect Barack Obama’s call for support of the industry, sending a letter to Treasury Secretary Henry Paulson to tap money from the $700-billion financial rescue package.
Obama has called the auto industry the “backbone of American manufacturing” and signalled his intentions under his presidency, which begins Jan 20, to help Detroit.
The White House Monday said the Treasury Department was still reviewing the letter, adding that Congress would have the opportunity when it resumes session next week to specifically consider additional support for the automakers beyond what’s feasible under the $700-billion financial bailout programme.
“We’ll certainly listen to ideas they have on how to accelerate the loans to viable companies, as laid out in the legislation,” White House spokesperson Dana Perino said.
The auto industry has already seen $25 billion approved to develop emissions-friendly technology, and Congressional leaders have discussed trying to find another $25 billion for them by year’s end.
US auto sales plummeted 32 percent in October to the lowest monthly total since 1991 as the industry continued to lose cash and shed jobs.
Ford, the second-largest US automaker, reported last week a third-quarter operating loss of $2.98 billion and said it would cut jobs and spending to preserve its perilous cash reserves.