House Speaker Nancy Pelosi (D-Calif.), for example, was (along with her husband) heavily invested in American International Group, which has received about $170 billion in federal help under the bailout, The Post found.

Republican Whip  Eric Cantor (R-Va.) and his wife held stock, retirement plans and other investments worth at least $183,000 and as much as $495,000 in firms benefiting from federal government rescue efforts, including Goldman Sachs and Morgan Stanley.

Rep. Thaddeus McCotter (R-Mich.) voted against the initial bill, but has since become one of the loudest supporters of using the bailout money to save Detroit’s ailing automakers. Not that it’s helped his investments in Chrysler, which has received billions of dollars under the bailout.

His disclosure forms for the end of 2007 showed he had between $1,000 and $15,000 in company stock, which by the end of last year fell to between $1 and $1,000 in value.

The disclosures prompted Melanie Sloan, who heads Citizens for Responsibility and Ethics, a government watchdog group, to ask what just might be the appropriate question: “You wonder,” she told The Post, “if they’re voting on things because it’s good for the country or because it would increase their personal wealth.”

[W]hen the federal General Services Administration announced this week that it had spent $287 million in stimulus money to buy 17,205 new cars, it turned out that the biggest beneficiary was the Ford Motor Company, the only one of Detroit’s Big Three automakers that has not received a government bailout.

The General Services Administration, which manages a fleet of 213,000 vehicles for some 75 federal agencies, said it spent $129 million to buy 7,924 Fords; $105 million on 6,348 General Motors vehicles; and $53 million on 2,993 Chryslers.

Like buying Verizon stock, then grabbing an iPhone.

“Some of the characterizations that were used today to refer to us as speculators or to say we’re looking for a bailout is really unfair,” said one executive who spoke on condition of anonymity because of the sensitivity of the matter. “What we’re looking for is a reasonable payout on the value of the debt . . . more in line with what unions and Fiat were getting.”

George Schultze, the managing member of the hedge fund Schultze Asset Management, a Chrysler bondholder, said, “We are simply seeking to enforce our bargained-for rights under well-settled law.”

But wait — aren’t these the same private funds that have exploited tax law for years, with managers raking in billion-dollar annual salaries in some cases, all the while being taxed at lower rates than their Manhattan doormen?

Stephen Pearlstein, the Pulizer Prize-winning Post business columnist, takes this up today in a biting column, arguing that there’s “nothing more pathetic than a hedge-fund manager worked up in a moral lather, complaining that he hasn’t been treated fairly.”

Since when did any of these guys ever worry about fairness?

Certainly fairness was not an overriding concern of hedge-fund managers when they threatened to move even more of their operations to the Cayman Islands if forced to pay a regular tax rate on their exorbitant management fees.

Nor do I recall receiving even a single e-mail from a hedge-fund manager complaining about how unfair it was that the government stepped in to bail out creditors and counterparties of Citigroup, Bear Stearns and AIG.

But now that these hedgies are looking at the butt end of a government-imposed cramdown that would give them only 30 cents of each dollar owed by Chrysler, suddenly they’re all about fairness and the rule of law.

What you need to know about these vultures is that their idea of fairness is throwing 100,000 people out of work and denying retirees their pensions and their health benefits just so they can liquidate the company and maybe squeeze an extra 15 cents on the dollar from their Chrysler debt.

It’s worth reminding that the hedgies Pearlstein attacks here are historic donors to the Democratic Party, which is largely the reason private equity managers pay a 15 percent capital gains tax on their pay, rather than the 35 percent income tax they would pay otherwise. Obama went after them in this round, but whether they’ll win or lose is now for the courts to decide.

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Well, it seems that some industry executives haven’t been willing to take the pay cut. The Washington Post reported today that Chrysler Financial — the lending arm of the withering automaker — lost out on $750 million in federal help because some executives refused to accept Washington’s pay limits. The development means that the company will have to take out its loans from private banks at higher rates, according to The Post.

Most of the agreement was in place, sources said. But on April 7, Treasury asked Chrysler Financial to have its top 25 executives sign waivers regarding their compensation, according to sources familiar with the matter who declined to talk publicly because they were not authorized to speak.

Within a week, the company responded that some of the executives had refused to give their approval. By last week, Treasury had rescinded the loan offer, the sources said.

Chrysler Financial is denying that this is the case, arguing that the company — which has already accepted $1.5 billion in emergency help from Washington — is healthy enough that it doesn’t need more, The Post reported.

“Chrysler Financial has determined that it has adequate private capital funding to cover the short-term needs of our dealers and customers and as such no additional TARP funding is necessary at this time,” the company said in its statement.

That turns this into an all-too-common he-said/she-said saga — and all the sources anonymous. We’re eagerly awaiting more details.

Yet the environmental goals of the program are quite modest. Although the White House press release on the subject claims that it will “prevent 26 million pounds of CO2 from entering the atmosphere,” it also states an “overall goal of at least a 10 percent increase in fuel-efficiency for the entire procurement.”

Studies have shown that 10 to 20 percent of a vehicle’s lifetime emissions come from its manufacture and disposal. If the government program results in the assembly of over 17,000 vehicles that are only 10 percent more efficient than those they are replacing, the overall effect is an increase in emissions.

The real impetus for this program, then, is to stimulate Detroit and help put the auto industry on a more eco-friendly path. The White House does not attempt to hide its aims; the press release states:

This accelerated GSA purchasing strategy is one component of the President’s overall commitment to supporting auto demand during this period of restructuring in the industry. Moving forward, the Administration will continue to work on several fronts to increase the flow of credit to auto consumers and dealers, and will work with Congress to pass an incentive program for people who turn in older, more fuel inefficient cars for cleaner cars.

Like a cash-for-clunkers program, this new fleet purchase is a small step toward a greener auto industry in the long term, even if its immediate effects are not as environmentally friendly as they appear.

We cannot, we must not, and we will not let our auto industry simply vanish. [...]

But after careful analysis, we have determined that neither [plan] goes far enough to warrant the substantial new investments that these companies are requesting. And so today, I am announcing that my administration will offer GM and Chrysler a limited period of time to work with creditors, unions, and other stakeholders to fundamentally restructure in a way that would justify an investment of additional tax dollars; a period during which they must produce plans that would give the American people confidence in their long-term prospects for success.

Among those conditions, General Motors CEO Rick Wagoner has been pushed out, and Chrysler will be required to finalize its plan to merge with Fiat — a deal that appears to be imminent.

Two notable elements of Obama’s speech today: First, the president did mention that the blame for the automakers’ troubles shouldn’t be pinned on the auto workers, but on “a failure of leadership — from Washington to Detroit — that led our auto companies to this point.” This was a not-so-veiled reference to the regional protectionism that found some of Washington’s most powerful Democrats literally defending Detroit’s automakers to death.

And second, he didn’t mention that the frozen credit markets that have largely contributed to the fall in car sales won’t be thawed without first stabilizing housing markets — a piece of the financial recovery that Congress seems willing to leave for last, despite the fact that it was the housing crisis at the root of the global economic meltdown.

Then again, consumers don’t have the lobbying prowess of Wall Street.

The boards of Chrysler LLC and Fiat SpA have given executives approval to complete an alliance deal that hinges on the terms for additional aid for the Detroit automaker, according to people with knowledge of the discussions.

The development comes before U.S. President Barack Obama’s expected announcement Monday on rescue funds for Chrysler and General Motors and more than two months after teams from Chrysler and Fiat began reviewing the proposed tie-up and developing a business plan for their combined operations.

Final terms of any deal will depend on what terms the U.S. autos task force headed by former investment banker Steve Rattner imposes on Chrysler as a condition for providing additional funding, according to the sources, who asked not to be identified because of the confidential nature of the talks.

Fiat CEO Sergio Marchionne has met with the auto task force twice and signaled his willingness to adjust the terms of the deal to satisfy the administration’s demands. The UAW supports the Fiat merger, which could save thousands of American jobs.

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Ed Brayton is a reporter for TWI’s sister site, The Michigan Messenger.

When the Bush administration agreed in December to tap Wall Street bailout funds to help Chrysler and General Motors avoid bankruptcy, the two auto giants said that $17.4 billion would see them through March — $13.4 billion for G.M. and $4 billion for Chrysler.

Now the numbers are growing.

Chrysler today announced that it will request $5 billion in additional emergency loans from Washington. The reason is no mystery: Last month, Chrysler sales fell 55 percent relative to the previous January.

As a condition of receiving additional funding, both Chrysler and G.M. were charged with submitting viability plans to Congress by 5 p.m. today. The details of G.M.’s plan are expected to be unveiled shortly.

Fugetaboutit.

The Treasury Dept. announced last night that it will spend $6 billion from that fund to bail out GMAC, the flailing auto finance company whose reluctance to lend to riskier loan applicants has contributed significantly to the drop in car sales this year. (In the third quarter, GMAC issued 22 percent fewer loans worldwide than it did a year before, Dow Jones reports.)

The $6 billion — $5 billion of which yesterday went directly to purchase shares in the company — comes on top of the $17.4 billion that the Treasury agreed to provide to the Big Three from the Wall Street bailout earlier this month. GMAC, a majority of which is owned by Cerberus Capital Management, the private investment firm that owns Chrysler, said today that it will immediately relax its lending standards — from a minimum credit bureau score of 700 two months ago down to a score of 621. From a statement from GMAC President Bill Muir:

We will continue to employ responsible credit standards, but will be able to relax the constraints we put in place a few months ago due to the credit crisis. We will immediately put our renewed access to capital to use to facilitate the purchase of cars and trucks in the U.S. [...]

[O]pening access to credit for those with CB scores of 621 or better will allow us to return to more normal levels of financing volume, and should help in efforts to stabilize the U.S. auto industry.

It’s not only the U.S. auto industry praying Muir is right. Everyone is struggling to sell cars — whether they be Hummers or Priuses — and a primary reason has been the credit freeze that’s made it tougher for consumers to finance new car purchases.

The sun sets on a General Motors plant. (Flickr: serhio)

After Senate Republicans dashed the Big Three automakers’ hopes for a congressional bailout last week, General Motors decided it was time to begin seriously exploring a Plan B. Company executives turned to the biggest name in corporate bankruptcy.

Harvey Miller, who has worked on mega-cases like Lehman Bros., Enron and WorldCom, is now advising GM on whether to file for Chapter 11 protection.

While the White House has suggested that financial help may be on the way, perhaps in the form of an $8-billion bridge loan, the Detroit automakers still have no guarantee of a federal lifeline.

Illustration by: Matt Mahurin

If GM does file for bankruptcy protection, Miller’s prowess is sure to be needed. The case would be unprecedented and no doubt controversial. GM owns physical assets worth about $160 billion, it directly employs 90,000 Americans and is an integral part of the U.S. economy.

No bankruptcy case has ever dealt with all the serious factors GM could face — from workers to assets.

Taken as a whole, the bankruptcy could be a Goliath, costing the company millions in legal fees. In a series of interviews with bankruptcy experts, including those who support GM filing for Chapter 11, all say a successful trip through bankruptcy court would not be free from pain. These bankruptcy authorities say any outcome could easily involve significant layoffs; cuts in workers’ wages and benefits; and deep wounds that would reverberate throughout related industries.

To avoid liquidation, the company would have to pare its operations. Such a process, with all its complexities — thanks to the auto giant’s vast and complex interconnections with suppliers, dealers and unions, coupled with its network of physical assets like assembly plants — could take years. The psychological effects on the American psyche could cut deep.

“These [auto] companies are so big,” said Robert Lawless, a bankruptcy law professor at the University of Illinois at Champaign Urbana. “You’d hate to throw around the word ‘unique,’ just like with Enron and Lehman Bros. … but I think the same thing would be true if an automobile company goes.”

GM CEO Rick Wagoner has worked to stave off a bankruptcy filing, citing fears that the company’s core problem, selling too few cars, would only get worse after filing for Chapter 11.

Aside from a home, a car is the most expensive purchase Americans make in their lives. It is not considered a casual purchase, like a domestic airline ticket or a household item. So the car company would need to take serious steps to reassure potential buyers that it can outlast the car.

When Hyundai Motor Co. teetered in 2000, for example, it instituted a 10-year warranty to prop up consumer confidence. GM might also be forced to slash sticker prices.

Wagoner has also alluded to the costs of filing for Chapter 11. Top-flight bankruptcy lawyers command hundreds of dollars an hour in fees. The specialist lawyers handling Enron, one of the biggest bankruptcy cases in history, were paid $688 million for their work. GM’s bankruptcy would likely be more complicated, which means comparable or even higher fees.

Supporters of a government-backed bailout as an alternative to bankruptcy point to the costs taxpayers and government would incur from a bankruptcy filing. According to a study by Anderson Economic Group, a business advisory firm, if all three automakers sought protection from creditors, states and the federal government would lose $70 billion in taxes in the first two years of bankruptcy. The study assumes 1.8 million jobs lost in the first year.

“When you consider [a government loan] is a self-financing-type loan,” said David Cole, chairman of the non-profit Center for Automotive Research, “the taxes the [Big Three] pay by working is more than adequate to cover any required bridge [loan]. Forgetting about politics and philosophy — this is really a self-financing type of activity.”

The glimmer of hope for GM that emerged from the White House on Friday was that government officials would use some of the $700 billion in bailout funds allocated for Wall Street to tide over GM and Chrysler until the next Congress and the Obama administration. Ford says it has enough cash to survive.

But even if the White House does extend a temporary lifeline, bankruptcy could still be on the table. According to some bankruptcy experts, that wouldn’t be a terrible idea for the automakers.

John A. E. Pottow, a professor at University of Michigan School of Law, explained that under Chapter 11, auto companies would be given instant breathing room from creditors, while allowing them to act more swiftly in renegotiating union contracts, trimming operations and reaching agreements with creditors. That’s an “unhappy reality,” he said, but a necessary one.

Blood-letting, Pottow said, is not the mark of failure in bankruptcy. “Success doesn’t mean people won’t be fired and plants won’t be closed,” he said. “That’s something different than success in bankruptcy.”

Cuts would be imminent if GM filed for Chapter 11 protection. The question is how deep would they run.

GM employs some 90,000 workers directly, and is tightly entwined with industries that employ thousands more. Some analysts say that, including subsidiary industries, the Big Three employ roughly 3 million Americans. When other big companies restructured under bankruptcy, they have been forced to implement serious layoffs.

For example, when GM’s chief axle and brake supplier, Dana Holding Corp., filed for Chapter 11 protection in 2006 with assets of $7.9 billion, it ultimately fired 20 percent, or 9,000, of its 44,000 workers and closed eight plants.

Dana instituted a two-tier union contract, in which newer hires receive substantially fewer benefits than their predecessors. Pay is also tiered: longtime workers make $20 an hour; new workers $14.

Bankruptcy is also not a quick process. Dana finally emerged from bankruptcy in February, after two years under Chapter 11 protection.

Bankruptcy supporters say that the idea of government help doesn’t need to be left at the courthouse door. With liquidity drying up and credit markets tight, it would be difficult for the automakers to get the loans from the private sector that they would need to restructure. The government could be their lender.

“This sort of direct government intervention we haven’t seen since the Great Depression,” said Pottow. “It’s a brave new world.”

Critics of the bankruptcy option say that downsizing a GM on paper doesn’t easily translate into real life for an industry that props up a network of suppliers and car dealers. Cole of the Center for Automotive Research said the effects of a bankruptcy restructuring would be devastating for businesses already on the brink of collapse. Four of the country’s biggest auto-parts makers have filed for bankruptcy in the last five years alone. Significant cuts in their contracts could push them into insolvency as well.

“This is one of the differences between the theorists and the people who understand the industry,” Cole said.

In the meantime, GM is attempting to cut costs. The company announced Friday that it will temporarily shutter 20 North American factories. It plans to produce 250,000 fewer vehicles in the first quarter of 2009 compared to the same time last year.

For the automakers, the bankruptcy process, though complicated, could buy some time. If GM files this month, for example, it could keep operating until President-elect Barack Obama is sworn into office Jan. 20. Obama has repeatedly supported a bailout for the industry.

“If they file for bankruptcy,” Lawless said. “bankruptcy doesn’t give them a good business model. It gives them a breathing spell to try to get the company back into financial health.”

GM would need to pay for its daily operations, but pre-existing creditors would be put at bay, allowing the company to sit tight until a government bailout — or a perhaps a new business plan — comes their way.