Amid a climate of economic despair, the U.S. federal government is faced with overseeing the troubled domestic auto companies.  The government approved $17.4B USD in loans for the troubled automakers, but now GM says that it needs more money or it will go bankrupt.  Furthermore, the government is struggling over what changes the automakers should be forced to adopt in order to qualify the loans.

The challenge is accentuated by the automakers' critical role in the American economy.  From the multitude of parts suppliers to software suppliers like Microsoft, many companies have money and jobs riding on the future of the U.S. domestic automotive industry.  The U.S. faces more pressure due to other countries' willingness to bail out their own auto makers or give them tax breaks and other special privileges.  For example, in Korea all foreign cars feature large tariffs, essentially forcing the vast majority of sales to be from domestic brands, while U.S. automakers enjoy no such privileges here at home.  Other countries like Japan make it difficult by limiting the amount of dealerships and repair centers for foreign vehicles.

Although the creation of a "Car Czar" to oversee the bailout was originally proposed, President Obama is now reportedly dropping that plan, and devoting his administration's top economic minds to the problem.

A special panel will now reportedly monitor the distribution of loans and try to work with the automakers to help them regain viability.  This panel will be led by the U.S. Treasury Secretary, Timothy F. Geithner, and the chairman of the National Economic Council, Lawrence H. Summers.  Ron Bloom, a restructuring expert who has advised the labor unions in the troubled steel and airline industries is also expected to be named a senior advisor to the panel, according to sources.  Mr. Bloom served as an “in-house” banker for the steel workers’ union, thus he brings valuable credibility to negotiations with both the UAW and the auto company's debtors.

The new panel will be called the Presidential Task Force on Autos.  Top officials from multiple agencies including the Treasury, labor, transportation, commerce, and energy departments will be tapped for positions.

President Obama is reportedly reserving the final decision about letting the automakers go bankrupt to himself.  Sources say he has not ruled out a controlled bankruptcy as a means of turning the automakers around.  David Axlerod, a key advisor, alluded to the possibility of bankruptcy on NBC's Meet the Press this weekend, stating, "We’re going to need a restructuring of these companies.  (Which would) require sacrifice not just from the auto workers but also from creditors, from shareholders and the executives who run the company."

President Obama's team is expected to mull over the automakers’ plans for a turnaround for a week or two before publicly announcing their decision.  In the meantime, talks between the automakers and UAW are reportedly continuing after UAW officials walked out on Friday.  Talks with shareholders are also ongoing.

Chrysler is currently asking for $3B USD more in addition to its $4B USD January loan.  It says that if it does not receive this money, it may go out of business.  General Motors meanwhile, is still receiving the $18B USD in aid it asked for in chunks, having received $9.4B USD, thus far.  It is set to receive another $4B USD soon if it meets the conditions set before it by Congress and the White House.

GM recently let loose another hint that it may soon drop its struggling Saturn brand as part of its turnaround plan.  Reminding everyone that he wasn't retired yet, GM Vice Chairman Bob Lutz commented in an interview with Automotive News that while he would love for Saturn to survive, "Frankly, the reality is that that is probably not going to be the outcome."

Saturn dealers responded to the comments with outrage.  They believe that GM has been planning to cut them off all along, but has just now let the news slip, after telling them otherwise.  GM had previously told Saturn dealers that it would continue delivering vehicles until 2012, though it announced no plans to deliver new models.