Fate In The Balance

Rumors around the Big Three are swirling today. One one hand, some are reporting a bailout deal is imminent and could come as soon as today. On the other hand, there's plenty of reporting that there's no deal coming and automakers like GM are facing an "orderly bankruptcy":

General Motors is likely to file for bankruptcy protection with government backing, giving bondholders a recovery of more than 25 cents on the dollar, according to Moody's Investors Service.

There is a 70 percent probability that the restructuring plan for U.S. automakers will consist of a prepackaged bankruptcy financed by government loans to get GM and Chrysler through to 2009, Moody's said in a report dated Dec. 15. Under that scenario, bondholders would be likely to lose less than 75 percent of their investment, Moody's said.

Either way, there are a lot of sectors of the economy in dire trouble. If Toyota is expected to be posting its first ever yearly loss today, you know things are bad for the automakers...all of them.

[UPDATE] Bush is apparently making a major automaker bailout announcement at 9 AM.

[UPDATE 2] The bailout is on, $17.4 billion in bridge loans.

The federal government will provide $13.4 billion in loans to automakers General Motors and Chrysler, the White House said Friday.

"Allowing the U.S. auto industry to collapse is not a responsible course of action," President Bush said Friday morning.

"The terms and conditions of the financing provided by the Treasury Department will facilitate restructuring of our domestic auto industry, prevent disorderly bankruptcies during a time of economic difficulty, and protect the taxpayer by ensuring that only financially viable firms receive financing," according to a statement released by the White House.

An additional $4 billion may be available in February, the Bush administration said.

A senior administration official briefing reporters said he expects that GM and Chrysler officials will be signing the loan papers to access the cash later Friday morning.

GM and Chrysler have until March 31 to prove financial viability, or the loans are called in.

We'll see where this goes. The fate of the Big Three is now in Obama's hands.