DICTATING TERMS:

Bush to Steer Course Of Aid to Automakers: Managed Bankruptcy Raised as One Option (David Cho and Steve Mufson, 12/19/08, Washington Post)

Under a managed bankruptcy or other form of major restructuring, auto workers unions could be forced to make wage concessions, management could be shuffled and investors' stakes punished or even wiped out.

In answering a question at a morning news conference, Perino said: "There's an orderly way to do bankruptcies that provides for more of a soft landing. I think that's what we would be talking about. That would be one of the options. I'm not saying that's necessarily what would be announced."

In the afternoon, the White House described the bankruptcy idea as one of several being considered.

"No one is hinting that is an option preferred more than any other option," said Tony Fratto, another White House spokesman. He noted that bankruptcy had been included as a possible alternative in unsuccessful legislation backed by the administration earlier this month in an effort to provide a $14 billion bridge loan to General Motors and Chrysler. Ford has said it does not need government money at the moment.

Because the next administration will have the task of overseeing the government loan, President-elect Barack Obama's transition officials have been in close contact with the Treasury and White House, several sources said. One government source said that Obama's aides have similar views as the current administration on what to do for the automakers.

Sources familiar with the negotiations between the Treasury and the car companies say that few auto executives are involved and almost all of those who are talking to the department are financial experts. GM has fewer than six people dealing with the Treasury, mostly answering "nuts and bolts and technical stuff," said a person familiar with the interactions.

The administration has yet to reveal any of its plans to the automakers, according to industry and government officials. Nor has the Treasury engaged with the United Auto Workers in the week since the congressional bailout proposal failed -- except for a single conversation that the union's legislative liaison Alan Reuther called a "fact-finding session."