Two of the struggling Detroit Three automakers should combine and prove to the government they are worthy of a $25 billion rescue package being considered for them, Bank of America CEO Ken Lewis said Tuesday.
“There are one too many” automakers, Lewis said, adding that he would require consolidation if he was deciding on a bailout.
“I think the American people are suspect of just giving more money and buying more time,” Lewis told reporters after a speech to the Detroit Economic Club. “They want to see that the companies have in fact changed and the strategies have changed.”
Charlotte-based Bank of America has received $25 billion in government funds as part of a bailout effort aimed at rescuing the financial system. Nine large banks, including Bank of America Corp., Wells Fargo & Co., Citigroup Inc. and JPMorgan Chase & Co., received $125 billion last month.
Treasury Secretary Henry Paulson told Congress earlier in the day the administration remains firmly opposed to dipping into the government's $700 billion financial bailout fund for General Motors Corp., Ford Motor Co. and Chrysler LLC.
Auto executives insist they need $25 billion in emergency bridge loans to avert a collapse of one or more of their companies.
Despite the losses automakers would suffer in the short term, Lewis said consolidation should be seen as positive in the long term.
“If those things save it, then they should be real happy,” he said. “You can either be happy for a short period of time or moderately happy for a long time. I'm just trying to make sure the industry survives, with so-called ‘tough love.'”