General Motors CEO Rick Wagoner, from right, Chrysler CEO Robert Nardelli and Ford CEO Alan Mulally testify at a Senate Banking, Housing and Urban Affairs Committee hearing on the automotive industry bailout on Capitol Hill in Washington, Tuesday, Nov. 18, 2008.

Oust Detroit 3 leaders, top Republican says

By KEN THOMAS • Associated Press • November 19, 2008

WASHINGTON — The senior Republican on the Banking Committee, said today he doesn’t believe there will be a turnaround in the troubled U.S. auto industry until its top management is ousted and its manufacturing operations are revamped.

I don’t think they have immediate plans to change their model, which is a model of failure,” Sen. Richard Shelby said, a day after the top executives of General Motors, Ford and Chrysler came to Congress to plead for a $25-billion “bridge loan” to avert layoffs and plant closings.

 

“I think a lot of it will be life support,” Shelby, R-Ala., said. “I believe their best option would be some type of Chapter 11 bankruptcy … These leaders have been failures and they need to go.”

 

Rep. Barney Frank, D-Mass., disagreed with that, saying choosing the bankruptcy option would like mean abrogation of labor contracts. “We already have too much union busting,” said Frank, appearing on CBS’s “The Early Show” with Shelby.

 

Frank called bankruptcy “the favored spectator sport” for political leaders who wish to dodge a tougher decision. Whatever the various arguments, Detroit is running out of time.

 

The automakers’ top executives will return to Congress today, appearing before a House committee to make the same plea they made Tuesday to the Senate Banking Committee.

 

Facing a less-than-receptive greeting there, General Motors Corp. CEO Rick Wagoner warned that the failure of the U.S. auto industry could lead to a loss of 3 million jobs within the first year and ripple throughout communities around the country.

 

“This is all about a lot more than just Detroit. It’s about saving the U.S. economy from a catastrophic collapse,” Wagoner said.

 

Dire assessments aside, the rescue plan appeared stalled on Capitol Hill, opposed by the Bush administration and Republicans in Congress who are reluctant to use the Treasury Department’s $700-billion financial bailout program to come up with the $25 billion in loans.

 

“You’re asking an awful lot,” said Sen. Christopher Dodd, D-Conn. “I’d like to tell you that in the next couple of days this is going to happen. I don’t think it is.”

 

A Senate vote on an automotive bailout plan, which would also extend jobless benefits, could come as early as Thursday, but it lacks the support to advance.

 

In an op-ed essay in today’s editions of the New York Times, Mitt Romney, a candidate for this year’s Republican presidential nomination, wrote: “If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry good-bye. It won’t go overnight, but its demise will be virtually guaranteed.”

 

Romney, who was born in Detroit and whose father was an auto industry executive, wrote: “Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.”

 

Rank-and-file Republicans and Democrats from states heavily affected by the auto industry worked behind the scenes trying to develop a compromise that could speed some aid to the automakers before year’s end. But it was an uphill fight.

 

Automakers were running into bailout fatigue on Capitol Hill. Lawmakers complained that many of the industry’s problems were self-made, citing their past reliance upon gas-guzzling trucks and SUVs and opposition to tougher fuel efficiency regulations. Many wondered if the companies would be back for more money in a year.

 

Chrysler LLC CEO Bob Nardelli rejected suggestions that the automakers should seek Chapter 11 bankruptcy protection similar to airlines that later emerged restructured and leaner. “We just cannot be confident that we will be able to successfully emerge from bankruptcy,” Nardelli said. Ford Motor Co. CEO Alan Mulally said the three automakers are highly interdependent.

 

The financial situation for the automakers grows more precarious by the day. Cash-strapped GM said Tuesday it would delay reimbursing its dealers for rebates and other sales incentives and could run out of cash by year’s end without government aid.

 

Given the concerns, Democrats in the Senate discussed but rejected the option favored by the White House and GOP lawmakers to let the auto industry use a $25-billion loan program created by Congress in September — designed to help the companies develop more fuel-efficient vehicles — to tide them over until President-elect Barack Obama takes office.

 

House Speaker Nancy Pelosi, D-Calif., and other senior Democrats, who count environmental groups among their strongest supporters, have vehemently opposed that approach because it would divert federal money intended to develop vehicles that use less gasoline.

More..

Big 3 CEOs plead for aid

Auto execs say situation dire, but senators skeptical

David Shepardson and Christine Tierney / Detroit News Washington Bureau

WASHINGTON — The prospects for an immediate $25 billion to shore up the U.S. auto industry seemed more doubtful than ever Tuesday as Detroit’s Big Three CEOs faced more than two hours of sharp grilling from skeptical senators.

The executives used dire language to make their case for federal aid. Chrysler LLC CEO Robert Nardelli said the automaker could be forced into bankruptcy without immediate help, and "we cannot be confident that we will able to successfully emerge." General Motors Corp. CEO Rick Wagoner said the failure of the industry would be "catastrophic," costing 3 million jobs in the first year. Ford Motor Co. CEO Alan Mulally said if one of the automakers failed, the whole industry could be disrupted.

Many senators were unmoved.

"You’re here to get life support," said Sen. Richard Shelby, R-Ala., the ranking minority member of the Senate Banking Committee. "Why aren’t you making money? How would you pay this money back?"

Wagoner said GM had asked for $10 billion to $12 billion, while Mulally and Nardelli each said they had asked for $7 billion.

The automakers disclosed that their cash burn was worse than most observers had thought.

Nardelli said Chrysler ran through $5 billion this year, including $3.3 billion in the third quarter, and had just $6.1 billion on hand. GM said it expected to burn through $15 billion this year and could burn through another $10 billion next year.

Both executives said their companies were months away from running out of money.

When asked to rank the relative financial health of the Big Three, United Auto Workers President Ron Gettelfinger responded: Ford, Chrysler, then GM.

The union chief faced other tough questions. Sen. Bob Corker, R-Tenn., pushed him on union work rules and the jobs bank, which pays workers nearly full wages even when they are laid off.

"I understand Mr. Gettelfinger has done a good job on behalf of all workers not working and being paid," Corker said, calling the practice unacceptable in other businesses.

One senator asked if the automakers would make monthly status reports on cash flow if they agreed to the bailout. Nardelli said he would be willing to accept a $1 a year salary compensation, but Mulally and Wagoner declined to make the same commitment.

Nardelli also said Chrysler would consider agreeing to new fuel efficiency standards. "We’d be open to any requirements," Nardelli said.

All three companies said they would spend the $25 billion in the United States, but none would commit to not seeking additional funds, a testament to the seriousness of their problems.

The automakers detailed for lawmakers how aggressively they have moved to cut costs, restructure and revamp their product lines to be more competitive with foreign rivals.

They said they were making progress until they were derailed by the credit crisis that has stalled the global economy and dried up consumer confidence. Auto sales have plunged to their lowest level in at least 15 years, dropping nearly 32 percent in October.

Wagoner said GM had made tremendous progress in recent years, reducing its costs by $9 billion since 2005, concluding a landmark accord last year with the UAW that will further slash wage and health care expenses, and achieving big improvements in designing and manufacturing vehicles and developing fuel-saving technologies.

"As a result of these and other actions, we are now matching — or besting — foreign automakers in terms of productivity, quality and fuel economy," he said.But there seemed to be little appetite for moving quickly to help.

With the Democrats’ plan to carve out $25 billion from the $700 billion Wall Street rescue package all but dead, the Senate’s top Republican, Mitch McConnell of Kentucky, endorsed the White House call to speed up money already authorized to go to automakers through an Energy Department loan program.

"To basically change the qualifications of the money that we have already appropriated is a sound way to go forward," he said.

But that idea faces enormous obstacles as well.

House Democrats and many environmentalists oppose it because the loans are supposed to be tied to projects that lead to significant fuel efficiency improvements.

Sen. Carl Levin, D-Detroit, said in order to get a bill, Republicans must write language that explains how they would quickly get $25 billion from the Energy Department program to automakers. But Levin was realistic about the long road they face.

"Progress: No. Effort: Hell, yes. Big-time effort," Levin said. "We haven’t seen progress and won’t see progress until we see the language from those who want to see the (Energy Department) funds."

Sen. Debbie Stabenow, D-Lansing, said she would "very reluctantly" agree to reworking the retooling loans if that was the only way to get help now.

Sen. Max Baucus, D-Montana, chairman of the Senate Finance Committee, said it was nearly impossible to make a deal before Congress adjourns for the year later this week.

"Reading the tea leaves, I just don’t think it’s going to happen," Baucus said.

"There’s not enough time given the opposition of the White House and opposition of the other side of the aisle."

Corker echoed the belief that nothing would get done this year, calling Tuesday’s hearing "the first step in a loan application."

Even allies of the auto industry like Sen. Claire McCaskill, D-Mo., declined to endorse the proposal to shift $25 billion from the $700 billion Wall Street bailout, known as the Troubled Asset Recovery Program, or TARP.

"I’m not sure we want to throw good money after bad," said Sen. Ken Salazar, D-Colo.

Wagoner said the company was moving quickly to right its business.

"We have more work to do in all aspects of our business," Wagoner said. "This is hard stuff."

GM said the Detroit automaker would use some of the money to pay suppliers and pay for part of the Chevrolet Volt program. The CEOS return to Capitol Hill today for a round of questions from the House Financial Services Committee.

Macomb County to cut 250 jobs to offset deficit

By Steve Neavling • FREE PRESS STAFF WRITER • November 18, 2008

Macomb County commissioners decided today to lay off up to 10% of the county’s workforce — or 250 employees — by next month to offset a daunting $20.8 million deficit for next year.

At risk of losing their jobs are sheriff’s deputies patrolling streets, prosecutors convicting criminals and specialists recruiting new jobs to a county already fearful of major layoffs in the auto industry.
 

A workforce reduction also may mean longer wait times for health services to seniors and lower-income families and documents such as land deeds and birth and marriage certificates.
 

“It’s down to ugly and painful,” Board of Commissioners Chairman William Crouchman said before his colleagues unanimously agreed to have him and finance leaders draw up a list of 250 employees to lay off.
 

Union leaders reacted with shock, saying the county cannot continue to deliver services with so many layoffs.
 

“I don’t see how the county can function with that magnitude of layoffs,” said Donna Cangemi, president of one of the county’s largest unions, American Federation of State, County and Municipal Employees, Local 411. “It’s going to be very painful.”
 

Commissioners backed off plans to use the county’s dwindling emergency reserves to offset the deficit after finance leaders delivered strong warnings that the account is dangerously low. Finance Director David Diegel said the county is in a very precarious position because taxes from property values continue to plummet, health care and pension costs are skyrocketing and automakers — the county’s biggest taxpayers — may close plants.
 

“There are a million uncertainties out there, and I don’t see any good news out there,” Diegel said in urging commissioners to stay away from emergency reserves.
 

So far this year, commissioners have cut $12 million from next year’s budget by eliminating health services, dozens of jobs, the Parks and Recreation Department and detention space for juvenile offenders.

More..www.freep.com/article/20081118/NEWS04/81118048

Macomb seeks to cut up to 280 jobs to balance budget

Jim Lynch / The Detroit News

MOUNT CLEMENS — With time running out for officials to put together a 2009 budget, Macomb County commissioners are eyeing a spending proposal that eliminates 30 unfilled positions and as many as 250 staffed positions.

Commissioners needed to approve the budget proposal, which calls for spending totaling $490,778,382, to meet a deadline for setting a Dec. 10 public hearing. It is clear, however, that much more work needs to be done.

Members of the county’s budget committee approved eliminating the 30 unfilled spots and asked department heads to help put together a plan eliminating the rest. The county has 2,900 employees.

Other options remaining on the table include dipping into the county’s rainy day fund or approving a tax increase.

Commissioners have struggled for months to cut into a projected $30 million-plus operating deficit for 2009. After several rounds of cuts that included job eliminations and program reductions, officials were able to lop off $12 million in spending for next year.

As the county’s budget committee came together Tuesday morning, Macomb commissioners still were more than $22 million short of what was needed. That number does not include any savings that could be generated in ongoing negotiations with the unions representing county workers.

But the day’s picture darkened even more with new projections that increased the projected shortfall.

"We had a 0 percent increase over 2008 in property tax increases," said John Foster, the county’s assistant financial director. "When you add it up, expenditures are way down but revenues are also down about $11 million."

Commissioners said the broad-stroke elimination of 30 unfilled positions would generate another $1.8 million in savings.

Prosecutor Eric Smith argued against that approach, citing a major staff turnover on his office already underway coupled with seven projected cuts on the unfilled position list.

"We’re doing everything we can to save the county money," Smith said. "And every time you give me a (budget) number, we find a way to reach it … But we need these positions."

In the end, commissioners approved the full list.

"I think we have to stay with the list or else everything falls apart," said Commissioner Ed Bruley, D-Clinton Township.

There are likely more changes to come. Commissioners are taking a hard look at overtime paid out in certain departments — particularly those departments where workers close to retirement are increasing their overtime.

"I think there has to be a way for us as elected officials to deal with this in a more forceful manner to look for abuses by employees who are bumping up their overtime," said Commissioner Robert Mijac, D-Sterling Heights. "… People are retiring early and then making a lot of money, 70 to 80 percent of their salaries (in pension payments). We cannot have that anymore."

You can reach Jim Lynch at (586) 468-0520 or jlynch@detnews.com.

More..

Moderator Note: Did you ever wonder what what going thru the minds of the people responsible for planning and executing the economic bailout package? How come it seems like such a roller coaster to get the economy stable?

Congress No Bone-US Autos by lemacks
Make a custom button At Zazzle
View other United States Buttons

DAIMLER OK’D RETENTION PLAN FOR EXECS

Chrysler execs get millions to stay put

Automaker defends payouts amid looming bailout talks

BY TOM WALSH and TIM HIGGINS • FREE PRESS BUSINESS WRITERS • November 13, 2008

As Detroit’s crumbling auto industry asks Congress for a bailout, Chrysler is in the awkward position of paying about $30 million in retention bonuses to keep top executives while the company cuts thousands of jobs.

Chrysler owes the bonuses under its contracts with about 50 executives, based on a retention incentive plan crafted early last year by former German parent DaimlerChrysler, when it was preparing to sell the Chrysler unit.

Nancy Rae, Chrysler executive vice president for human resources and communications, said the move made sense at the time to ensure potential buyers that key Chrysler executives would remain in place after a sale. She acknowledged that the bonuses could be seen as controversial now.

"We all would be smarter if we knew what we know now back in February of ‘07," she said. "Probably a lot of different decisions would be made."

Chief executives of Chrysler LLC, General Motors Corp. and Ford Motor Co. are expected to testify next week before a House committee on a proposal for $25 billion in low-cost government loans to help keep the companies afloat. Any aid is expected to come with limits on executive pay and bonuses. It is unclear whether those conditions would affect existing bonus plans — Chrysler’s was hatched around April 2007 — or merely limit future bonuses and golden parachutes.

Retention bonus plans are fairly common in volatile times and at troubled companies that are straining to attract and retain top talent.

But they have been controversial in recent automotive industry bankruptcy cases involving suppliers Delphi Corp. of Troy and Toledo-based Dana Holding Corp. A 2005 change in U.S. bankruptcy laws forbade the payment of retention bonuses to executives just for staying at a company while it’s in bankruptcy proceedings.

Documents obtained by the Free Press show that at least six Chrysler executives are due to receive bonuses of more than $1 million apiece to stay through August 2009, the two-year anniversary mark of when private equity firm Cerberus Capital Management bought an 80.1% stake in Chrysler.

Those promised the largest retention bonuses:

• Frank Ewasyshyn, executive vice president, manufacturing, $1.89 million.

• Frank Klegon, executive vice president, product development, $1.8 million.

• Rae, $1.66 million.

• Simon Boag, president, Mopar/global service and parts, $1.65 million.

• Steven Landry, executive vice president, North American sales, $1.63 million.

• Michael Manley, executive vice president, international sales, marketing and business development, $1.53 million.

The bonus sizes ranged from a high of Ewasyshyn’s $1.89 million down to $200,000. The agreements provided for payments of 25% of the bonuses in February 2008 — which were made on schedule — and for the remaining 75% to be paid in August 2009.

Promise of a smooth transition

In an interview this week, Rae said Daimler considered it necessary to develop the plan because potential buyers wanted assurance of a smooth transition.

"These were very conservatively constructed," she said of the bonuses. "And keep in mind that it was Daimler doing it, Daimler selling the company and Daimler ensuring it was reasonable for a buyer. … This was a Daimler program."

She added, "What was put in place at that time was very appropriate — not only" as a "market practice but for the environment, the conditions of the company, the potential sale."

Peter Morici, a University of Maryland professor and former chief economist at the U.S. International Trade Commission, said he expects executive compensation to become a large issue during the debate over aid for the automakers. He questioned the need of retention bonuses for auto industry executives.

"Who are they going to work for?" he asked. "My feeling is they’ve run the companies into the ground."

John Challenger, a human resources expert with Challenger, Gray & Christmas in Chicago, acknowledged that such bonuses can be controversial but said companies see them as necessary to prevent loss of leadership during critical times.

"To get good people, the right people, then you often have to pay retention bonuses — otherwise they just won’t come or they won’t stay," he said.

Rae said the Chrysler plan has succeeded in keeping talent in place.

"It’s been very successful in these challenging times," Rae said.

With public support for helping auto companies weak, according to a Gallup poll, Congress has vowed to prevent big bonuses to executives as a condition of federal aid.

U.S. House Speaker Nancy Pelosi, D-Calif., said Congress will push next week to expand the nation’s $700-billion bailout of the financial industry, called the Troubled Asset Relief Program, or TARP, to include automakers.

The auto companies would face limits on executive pay and bans on so-called golden parachutes, which enrich departing executives, said Pelosi and U.S. Rep. Sander Levin, D-Mich.

"We’re very much interested in making sure there is shared effort and shared sacrifice," Levin told the Free Press.

Levin said lawmakers discussed those provisions at a meeting last week in Washington with automotive Chief Executive Officers Rick Wagoner of GM, Alan Mulally for Ford and Bob Nardelli of Chrysler, as well as UAW President Ron Gettelfinger.

"Everyone said they fully understood that," Levin said.

U.S. Sen. Chuck Grassley, R-Iowa, sent a letter Thursday to Wagoner, Mulally and Nardelli, urging them to trim executive compensation packages if they expect loan aid.

"They should take every step possible, including cutting executive salaries and bonuses, and exhaust all alternatives before coming to the taxpayers for tens of billions of dollars in help," Grassley said in a written statement.

Bailout regulations

The bailout legislation providing aid to troubled financial institutions requires that companies "meet appropriate standards for executive compensation and corporate governance." The rules prohibit new employment contracts with golden parachutes for executives of companies in which the Treasury takes an ownership position, but the language does not specifically address a retention bonus plan such as Chrysler’s, in place before any federal aid is requested.

So far, the government has provided aid only to publicly owned companies. If federal aid is granted to Chrysler, a private company, questions will likely arise over how much internal information Chrysler would be required to disclose.

Rae said Chrysler stands ready to answer Congress’ questions.

"We are very prepared to be transparent with the government," Rae said. "From what we understand, we’re prepared to meet the same limitations that have been imposed on the other financial institutions that have been successful in receiving government money."

Labor unions have protested that company executives should not be unduly enriched when they are laying off workers and cutting the pay and benefits of lower-ranking employees.

The UAW could not be reached for comment Thursday.

Delphi, which has been in Chapter 11 bankruptcy since 2005, has drawn fire from labor officials for executive bonus plans that were approved by the bankruptcy court. Union leaders claimed, unsuccessfully, that they were tantamount to retention plans because they had easily reachable performance goals.

Since Daimler first announced in February 2007 that it was considering the sale of Chrysler, it has been a difficult stretch for the Auburn Hills automaker. Chrysler’s U.S. sales this year have dropped further than any Detroit competitor — down 26% through October.

Since February 2007, the automaker has announced the elimination of 34,000 jobs, including salaried, hourly and contract positions.

Contact TOM WALSH at twalsh@freepress.com. Contact TIM HIGGINS at thiggins@freepress.com.

Editor’s note: Comments on this story have been temporarily disabled.

Techies Look to White House Web as New Tool to Reach Internet-Savvy Obama

The Obama campaign demonstrated its ability to manipulate the Web for outreach to voters. Now comes the test on translating it for public service.

• BUSINESS WORLD
• NOVEMBER 12, 2008

Obama’s Car Puzzle

You have in GM’s Volt a perfect car of the Age of Obama — or at least the Honeymoon of Obama, before the reality principle kicks in.

Even as GM teeters toward bankruptcy and wheedles for billions in public aid, its forthcoming plug-in hybrid continues to absorb a big chunk of the company’s product development budget. This is a car that, by GM’s own admission, won’t make money. It’s a car that can’t possibly provide a buyer with value commensurate with the resources and labor needed to build it. It’s a car that will be unsalable without multiple handouts from government.

The first subsidy has already been written into law, with a $7,500 tax handout for every buyer. Another subsidy is in the works, in the form of a mileage rating of 100 mpg — allowing GM to make and sell that many more low-mileage SUVs under the cockamamie "fleet average" mileage rules.

Even so, the Volt will still lose money for GM, which expects to price the car at up to $40,000.

We’re talking about a headache of a car that will have to be recharged for six hours to give 40 miles of gasoline-free driving. What if you park on the street or in a public garage? Tough luck. The Volt also will have a small gas engine onboard to recharge the battery for trips of more than 40 miles. Don’t believe press blather that it will get 50 mpg in this mode. Submarines and locomotives have operated on the same principle for a century. If it were so efficient in cars, they’d clog the roads by now. (That GM allows the 50 mpg myth to persist in the press, and even abets it, only testifies to the company’s desperation.)

Hardly mentioned is the fact that gasoline goes bad after a few months. If the Volt is used as intended, for daily trips of 40 miles or less, the car’s tank will have to be drained periodically and the gas disposed of.

The media have been terrible in explaining how the homegrown car companies landed in their present fix, when other U.S. manufacturers (Boeing, GE, Caterpillar) manage to survive and thrive in global competition. Critics beat up Detroit for building SUVs and pickups (which earn profits) and scrimping on fuel-sippers (which don’t). They call for management’s head (fine — but irrelevant).

These pre-mortems miss the point. Critics might more justifiably flay the Big Three for failing long ago to seek a showdown with the UAW to break its labor monopoly. In truth, though, politicians have repeatedly intervened to prevent the crisis that would finally settle matters.

The Carter administration rushed in with loan guarantees to keep Chrysler out of bankruptcy. The Reagan administration imposed quotas on Japanese imports to prop up GM. Both parties colluded in the fuel-economy loophole that allowed the passenger "truck" boom that kept Detroit’s head above water during the ’90s.

Barack Obama and Nancy Pelosi now want to bail out Detroit once more, while mandating that the Big Three build "green" cars. If consumers really wanted green cars, no mandate would be necessary. Washington here is just marching Detroit deeper into an unsustainable business model, requiring ever more interventions in the future.

The Detroit Three will not bounce back until they’re free to buy labor in a competitive marketplace as their rivals do. In the meantime, private money, even in bankruptcy, almost certainly will not be available to refloat GM and colleagues. Nationalization, with or without a Chapter 11 filing, is probably inevitable — but still won’t make them competitive.

History seldom affords such perfect analogies: In 1968, the Penn Central merger (a proxy for GM-Chrysler) was touted as a fix for a sagging rail business. In two years, the company was in bankruptcy. When a judge couldn’t find new lenders, Washington absorbed them into government-owned Conrail, but the death spiral continued. Finally, Congress passed the deregulatory Staggers Act, which overnight gave the rail industry back its future. Conrail was triumphantly reprivatized in 1987.

He ran a brilliant campaign, but his programmatic prescriptions amounted to handwaving designed to capture the presidency rather than tell voters what really to expect. This may have been a virtue in campaigning but it becomes a handicap in governing. The public now has no idea what to expect — except miracles, reconciling all opposites, turning all hard choices into gauzy win-wins. Thanks to Detroit, his honeymoon is about to end before it begins.

Please add your comments to the Opinion Journal forum.

More..

Goldman stops rating GM stock, JPMorgan downgrades shares

Michael Patterson / Bloomberg News

Goldman Sachs Group Inc. removed its investment rating and share-price target for General Motors Corp., saying the largest U.S. automaker may need $22 billion and it’s "highly uncertain" Congress will pass a bailout package this year.

"There is not currently a sufficient basis for determining an investment rating or price target for this company," Goldman analyst Patrick Archambault wrote in a research note today. "Given GM’s large capital requirements, we believe a new government assistance program is most likely. The ability of Congress to pass such a measure this year is highly uncertain."

JPMorgan Chase & Co. analyst Himanshu Patel downgraded GM shares to "neutral" from "overweight" in a research note today, citing "the ambiguity of the government aid structure, and particularly its potential dilutive impact on equity."

GM slumped 32 percent in New York trading since Nov. 7, when it reported a $4.2 billion third-quarter operating loss and said it may not have enough cash to stay in business this year. The Detroit-based company asked the government for financial aid after job cuts, factory closures and reduced production failed to stem losses from a 20 percent decline in U.S. sales this year.

GM shares lost 13 cents, or 4.3 percent, to $2.95 in New York trading at 11:42 a.m. today. The stock has dropped 88 percent this year.