While Press’ $2.4 million annual salary could cover that debt, public records show the executive faces mounting monthly bills stemming from a costly divorce and a real estate spending spree launched after Press was hired by Chrysler in September 2007.

The lawsuit and lien reveal a truth that applies to executives and blue-collar workers, experts said.

“People who make very little and people who make very much all get into financial problems,” said executive compensation expert Paul Dorf, managing director of Compensation Resources Inc. in New Jersey. “I don’t know that he’ll be on the bread line, but I certainly would think there are other people who have seven-digit or above compensation having financial problems.”

But those problems rarely surface, experts said.

Press’ problems did. Public records show he owes the IRS almost $1 million in delinquent income taxes and is being sued by his credit union for defaulting on a $609,000 loan.

Oakland County records chronicle the toll the automobile industry collapse has taken on one of its top executives, whose financial woes mirror those of his company, which was forced into bankruptcy April 30.

Press did not respond to an e-mail seeking comment Friday. His lawyer, Wallace Handler, declined comment, and Chrysler spokeswoman Shawn Morgan also declined comment, saying the matter was “personal.”

In November, as the auto industry struggled and as Press lobbied senators to support a $25 billion bailout package, he was caught in his own financial trap, records show.

That month, Press defaulted on a $609,286 loan from Western Federal Credit Union and was pleading for more time to repay.

On Nov. 11, Press wrote a letter on Chrysler stationery to the California-based credit union.

In it, Press blamed his money problems on Chrysler eliminating his year-end bonus and said two banks refused to lend him more money or refinance his home.

“In this terrible credit environment, I have exhausted other avenues of getting a new loan which would allow me to pay you off,” Press wrote in the letter, obtained by The Detroit News. “My last and least desirable alternative is to notify you of the situation.”

He called the problem a cash-flow issue. Divorce records filed in Los Angeles County show Press earns $2.4 million a year. His ex-wife Linda receives $40,000 a month in spousal support and $16,000 a month in child support, according to court records.
‘A little surprising’

The revelations stunned auto industry analysts.

“Wow, it’s a little surprising,” said Joe Phillippi, principal of Auto Trends Consulting Inc. in Short Hills, N.J. “The way big corporations tend to work with senior guys, they don’t have to worry about these sort of personal financial things. They give you access to a financial adviser or people on the outside to do their taxes.”

The letter was written the same week as Chrysler launched a campaign to mobilize groups, including employees, suppliers and dealers, to contact congressional representatives on the importance of saving the auto industry and the company.

According to Oakland County Circuit Court records, Press had an unsecured personal line of credit with Toyota Federal Credit Union until the credit union merged with Western Federal in September 2007. Western Federal ended the practice of extending unsecured lines of credit and asked Press to pay off the loan, according to Press’ letter.

Press didn’t have the cash, however.

He asked for more time, and the credit union agreed. He owed $816,000 and agreed to make four payments starting in June 2008, according to court records.

By August 2008, Press had repaid $410,000 but defaulted in November after failing to make the first of two $203,000 payments, court records indicate.

In the November letter, Press explained why.

“I am not able to make the November and February payments due to the elimination of bonuses, which was just announced by my company,” Press wrote. The bonus was eliminated as the auto industry tumbled to historic lows and amid congressional backlash after CEOs of Detroit’s three carmakers flew on private jets to Washington, D.C., to seek emergency financing.

Press joined Chrysler LLC in September 2007 as vice chairman and co-president, which was considered a coup because of his success at Toyota Motor Corp. But it was a costly coup as Press received a compensation package reportedly worth at least $50 million — including a reported stake in Chrysler, which would have plummeted in value after the automaker filed for bankruptcy.

He was counting on a continued payday when he wrote Western Federal and asked for more time to repay the loan.

“My employment is not in jeopardy, and I still have monthly income to service the note as President and Vice Chairman of Chrysler LLC,” Press wrote in the letter.

But last month, news surfaced that Press is expected to leave the automaker by year’s end in a management shake-up under new Chief Executive Sergio Marchionne.

And 10 months after Press wrote the plea, a larger debt surfaced.

The IRS filed a $947,410 lien against Press and his wife, Suwichada, on Sept. 1, claiming the Birmingham couple owe unpaid income taxes from 2007, according to Oakland County Register of Deeds records.

A lien is filed when taxes haven’t been paid and gives the government a legal claim to a person’s or company’s property. Liens serve as security or payment for the tax debt.

The address listed on the tax lien is a 6,800-square-foot, six-bedroom New England-style mansion Press bought last year in Birmingham. He took out a $2.2 million mortgage in May 2008, according to Oakland County property records.

Press is trying to sell the home for $3.15 million and has listed it with SKBK Sotheby’s International Realty of Birmingham.

It is the latest asset Press has tried to unload.

This summer, Press listed his four-story New York City townhouse off Park Avenue for $15.7 million.
Townhouse cost $13.5M

Public records show he bought the townhouse for $13.5 million in December 2007 — three months after being hired by Chrysler.

New York City property records show Press and his wife got a $12.96 million mortgage from Cerberus Capital Management II LP, an affiliate of Chrysler-parent Cerberus Capital Management LP.

After drawing interest from several potential purchasers, Press opted to rent the townhouse to a tenant for a year, “to allow Mr. Press a bit more time to make a decision on whether to sell it,” agent Steven Christopher Halstead said.

“It was an exceptional property, and like many other exceptional properties in New York City, fortunately there is always a group of people capable of buying them,” Halstead said.

Press and his ex-wife own a $2 million home outside Los Angeles, records show. He also owns a $470,000 condominium in New Orleans near the French Quarter, records show.

The IRS has filed identical liens in Michigan, Louisiana and New York.

Unless he arranges a payment plan or fights the lien, the IRS would be paid from any proceeds of the real estate sales, said tax lawyer Jay Kennedy of Warner Norcross & Judd LLP in Southfield. “I think that probably they’re just going to say, ‘We’ll take our $950,000 and you take the rest,’ ” Kennedy said.

The whole deal — an acquisition without cash, control with a minority stake, and the fact that it was brokered by government — is unusual, said Mike Boudreau, a director with Bloomfield Hills turnaround firm O’Keefe & Associates. “But it was necessary to protect the industry.”

It is a sign of just how desperate Chrysler’s plight was that Fiat was able to swoop in with an empty wallet after a two-year search failed to find a global partner.

Without a financial suitor to replace Cerberus Capital Management LP, Chrysler would have collapsed in the wake of the biggest industry sales downturn in 40 years.

The Obama administration defends the terms as the best option on the bargaining table.

“Fiat is going to be in a strong position to help with the restructuring of Chrysler in ways that will be mutually advantageous, and so we think it’s a desirable structure,” said Larry Summers, President Barack Obama’s chief economic adviser and co-chairman of the administration’s auto task force. “At the same time, we’re glad that there are a range of other stakeholders with ownership interests in the company.”

With credit markets frozen and the auto industry on the verge of collapse, posing a threat to the broader economy, turnaround experts say the noncash deal was the only viable option.
‘It does make sense’

“In this situation, it does make sense,” said Van Conway, president of Conway MacKenzie Inc., a Birmingham management and restructuring firm.

Today, offering stock and options to lure new management with little investment is common in business. And in the private sector, the amount of money invested and shares held is not always proportional to management control.

The majority stakeholder in the new Chrysler Group is the voluntary employees’ beneficiary association, a health care retiree trust run by the United Auto Workers.

The union from the outset said it did not want to be the majority shareholder — it was essentially forced to accept equity in the VEBA in lieu of a cash contribution the bankrupt automaker could not afford — and the union hopes to sell its shares as soon as possible. The union also has said it does not want to run General Motors Corp., where a similar VEBA will hold 17.5 percent of the automaker when it emerges from bankruptcy.

Chrysler Group LLC was created by combining certain assets of bankrupt Chrysler with Fiat, and the new company’s ownership breaks down this way: the U.S. Treasury with 9.85 percent, Canadian and Ontario governments with 2.46 percent, the UAW’s VEBA with 67.69 percent and Fiat with 20 percent.

Experts say it makes strategic sense for Chrysler to lean on Fiat at this time. “Fiat is the only shareholder that has automotive operating experience,” Conway said. “Not only will they (Fiat) run it, they will add to it.”

The Fiat deal is designed to allow the Italian automaker’s stake to grow to 35 percent over the next two years if it meets certain conditions, such as building small engines and vehicles for Chrysler in the United States, and distributes Chrysler products abroad.

The original tie-up agreement called for Fiat to have a 35 percent stake from the beginning, but the task force dictated the new terms that now have Fiat’s stake gradually increasing in 5 percent increments as it meets each condition.

Increasing Fiat’s stake will reduce the governments’ slice to 10 percent (8 percent for the U.S., 2 percent for Canada) and the VEBA will retain 55 percent.

The breakdown of Chrysler’s nine-member board also does not fall in line with the equity. Fiat initially gets three appointments, including CEO Sergio Marchionne — who doubles as chief executive at Chrysler — the Treasury department appoints four, and Canada and the VEBA appoint one each. Once Fiat reaches 35 percent equity, it can appoint a fourth board member, and a Treasury appointee would step down.
Stake can increase

Upon repayment of $6.6 billion in government loans keeping Chrysler afloat, Fiat can increase its stake to 51 percent between Jan. 1, 2013, and June 30, 2016.

The governance structure appeals to all parties.

For Fiat, the alliance dovetails with its global expansion goals but a lack of cash to execute it.

Fiat values the technology and engineering it is sharing with Chrysler at $3 billion, said Alfredo Altavilla, head of business development. Chrysler will have access to small car, small engine and diesel technology — all Fiat specialties. For Chrysler to duplicate the efforts from scratch would cost $8 billion to $10 billion, former Chrysler Vice Chairman Tom LaSorda said.

Chrysler also values the management services Fiat will provide, said spokeswoman Lori McTavish, noting Fiat was in the same financial straits five years ago that Chrysler is in now.

Marchionne is restructuring Chrysler along brand lines, similar to how Fiat is organized. But of the 23 people on Marchionne’s Chrysler management team, only three are from Fiat. But the deal is not risk-free for Fiat, which has rebounded from steep financial losses in the late 1990s and early 2000s. With Chrysler under its belt, its liquidity, management and CEO will be strained.

For these reasons, Standard & Poor’s Ratings Services said it is keeping Fiat on CreditWatch.

On a more positive note, “the new entity’s structure is designed to be leaner, and the debt burden has been reduced,” said credit analyst Barbara Castellano.

Chrysler said Tuesday it would allow its closing dealers until June 15 to transfer their unsold inventory to other dealers. “The company is trying to be compassionate toward its dealers,” said Kevyn Orr, a lawyer for Chrysler.

Stephen Lerner, a lawyer for the dealers, told Gonzalez that Chrysler was acting in an “unconscionable” fashion and that the process had been “less than fair to dealers.”

Chrysler “could have provided a softer landing to its dealers,” Lerner said.

But Orr noted that the company has the right to terminate contracts in bankruptcy. “We’re not here to negotiate,” he said.

He said dealers who don’t take advantage of the offer to transfer vehicles were acting “irrationally.”

But closing dealers may be stuck with unsold parts and tools. After Tuesday, they will not be able to sell new Chrysler vehicles with warranties or be eligible for Chrysler sales incentives — moves that would make it effectively impossible to sell most vehicles.

General Motors Corp., which is seeking to shutter at least 2,400 dealers, has taken a much different tack with its dealers.

GM is offering an appeal process for closing dealers and has reversed itself in at least 11 cases. GM is offering cash payments of up to $1 million for closing dealers and giving them 18 months to wind down and sell off their inventory.

“Employees’ families are destroyed,” Lerner said of Chrysler’s closing decisions. “It did not have to be this way.”

Orr said the closing dealers have just 2 percent of the initial 44,000 units of inventory they held when Chrysler announced their closings on May 14 — and that 98 percent of the inventory has been reallocated on terms.

Chrysler has “implemented a reallocation program under which qualified new Chrysler, Dodge and Jeep vehicles held by consenting (closing) dealers will be purchased from these dealers by remaining authorized dealers on terms and conditions substantially similar to the repurchase of vehicles that otherwise would occur under certain,” the company said. Judge Gonzalez cited the program in approving the request to close the dealerships.

A series of lawyers representing the more than 300 Chrysler dealers objecting to the closing are addressing the court. One, Russell P. McRory, compared Chrysler to the Wizard of Oz, saying they were trying to convince the court to “pay no attention to the man behind the curtain.”

Lerner also asked Gonzalez to at least delay approving the closing of dealers until the Supreme Court decides whether to approve the sale of the bulk of Chrysler’s assets. Another lawyer said the dealers should be able to stay open until Chrysler’s tie-up with Fiat SpA closes.

A lawyer for the Illinois Secretary of State’s office said that under state law closing dealers get 60 days to wind down. If the court follows the state law, those dealers would still have about 30 days left to sell off inventory. Other states, including New York, allow closing dealers after 90 days.

On Monday, Justice Ruth Bader Ginsburg delayed Chrysler’s exit from bankruptcy, extending a stay issued Friday by the federal appeals court in New York, which had upheld Gonzalez’ May 31 approval of the sale of Chrysler’s assets. The company’s “bad assets” will be sold off over the next year or so in bankruptcy. The Supreme Court had taken no action as of mid-afternoon Tuesday.

Chrysler has said the dealers closing are underperforming — and account for just 14 percent of its annual retail sales.

A House Energy and Commerce subcommittee is set to consider the issue of the closing GM and Chrysler dealers on Friday, with GM CEO Fritz Henderson and Chrysler president James Press scheduled to testify, along with John McEleney, head of the National Automobile Dealers Association. The Senate Commerce Committee held its own hearing on Wednesday on closing dealerships — with the three same witnesses, among others.

His lone automotive experience was during his tenure with McKinsey and Co. Inc. when he worked with a client in the industry.

He will take over once Chrysler Group LLC buys the desired assets of Chrysler. A hearing on the asset sale is set for May 27 in New York.

Kidder currently is also chairman and CEO of 3Stone Advisors LLC, an investment firm that specializes in “clean-tech companies.”

“We are most fortunate that Bob Kidder will lead the new company through its transformation,” Nardelli said. “My No. 1 priority has been to preserve Chrysler and the livelihoods of thousands of people who depend on its success. With his broad expertise serving on numerous world-class boards and his accomplished business background, Bob will provide the leadership and strategic counsel that will help to create a strong global competitor moving forward.”

Kidder lives in Columbus, Ohio, and earned a degree in industrial engineering from the University of Michigan.

“I am pleased to join Chrysler at a time when Chrysler is poised to launch an exciting new era,” he said. “I am confident that Chrysler will emerge from Chapter 11 a lean and powerful competitor, combining its own rich history of innovation with Fiat’s technology and expertise to invigorate the American car market and to challenge other car companies around the globe.”

The new Chrysler-Fiat will have a new board of directors, with the majority being independent.

Nardelli returns to Cerberus Capital Management LP as an adviser.

Now, under Chrysler’s acceptance of $4 billion in federal loan guarantees granted late last year, it must seek U.S. Treasury (and soon, car czar) approval for any asset sale of more than $100 million.

This all came up after the North American International Auto Show press days ended when published reports noted a.) Magna International, which lost a bid to Cerberus to buy Chrysler in 2007, hired Wolfgang Bernhardt to work on its Russian business and b.) rumors resurfaced that the Nissan-Renault alliance was in talks to buy “key assets,” such as Jeep, from Chrysler.

So there is no basis for the Nissan-Renault rumor, aside from the fact that American Motors built Renault Alliances in Kenosha, Wisconsin, when it owned Jeep. Cerberus’ rejection of any alliance between Chrysler and Nissan last year no doubt has put the Japanese automaker off any serious talks. In any case, Nissan-Renault, like the rest of the corporate world, has no extra cash or credit lying about to buy anything substantial, right now. Whatever you think of him, Carlos Ghosn is too smart for all that.

The Magna implications are more complicated. Ford Motor Company has just signed an alliance with Magna to build electric vehicles for the Dearborn automaker. Magna Steyr, a Magna International subsidiary, assembles cars and trucks for several different manufacturers in Europe, so there’s no real issue over dealing with several competitors.

In May 2007, Magna announced it would sell half its shares to a company owned by Oleg Deripaska, then Russia’s second-richest man. Forbes later named Deripaska Russia’s richest man, but by last fall, he had just 20% of Magna. Then he had to surrender it all to creditor BNP Paribas SA on a margin call.

Basic Element, Deripaska’s holding company, also controls Russian automaker OAO GAZ and United Co. Rusal, the world’s largest aluminum producer, according to Canada’s Financial Post (which spells it “aluminium,” of course). GAZ, you may remember, bought one asset from Chrysler LLC last year: tooling for the better-looking, last-generation Chrysler Sebring sedan (GAZ pictured above).

LaSorda said Wednesday that Chrysler will try to sell tooling for its Chrysler PT Cruiser, which goes out of production this summer. That’s not much of a fund-raiser – such tooling would go for well under that Treasury department minimum of $100-million.

The dwindling number of high-paying factory jobs is chipping away at the middle-class lifestyle that auto factory work has provided for generations of black families, many of whom left their native South years ago to pursue opportunity up north.

“Union jobs in auto has been one of the most important sources of well-paid employment for African-Americans since World War II,” said John Schmitt, an economist who’s studied the trend for the Center for Economic and Policy Research, a Washington think tank. “Like no other profession, it created a black middle class. No profession has replaced it.”

Between 1979 and 2007, blacks lost more than 120,000 auto jobs, Schmitt estimates. The losses hit the African-American community more than whites or Latinos because the share of black workers in the auto industry — 14.2 percent — is much higher than their share of the total labor force — 11 percent.

About 118,000 African-Americans work in the auto industry, down from 137,000 in December 2007, according to Schmitt’s research. He said factory layoffs at Detroit’s Big Three translate into an overall decline of middle-class incomes for the black community.

According to separate study by the Economic Policy Institute, a pro-labor Washington think tank, auto job losses between 2000 and 2004 helped pull down median weekly wages of all black workers by 5 percent, to $523.

Those jobs, and wages, will continue to shrink.

The $17.4 billion federal bailout of General Motors Corp. and Chrysler LLC requires the automakers to seek concessions from the United Auto Workers, with a target of wage parity with nonunion workers at U.S factories run by foreign automakers.

Additionally, the automakers, along with Ford Motor Co., which is not participating in the bailout loans, continue to cut factory jobs as they remake themselves to be profitable as smaller companies that can better compete with foreign rivals.

Nationally, ex-factory workers are the least likely of all workers to find new full-time jobs, and a third will eventually accept work for less pay, often 20 percent less, with less generous benefits, according to studies of displaced workers by the U.S. Bureau of Labor Statistics.

George McGregor is among the hundreds of thousands of blacks who have benefited from a union auto job. After serving a tour of duty in Vietnam, he made his way to Detroit from his home in the South in search of an assembly line job with one of the Big Three.

Within days he nabbed a job at GM’s now-closed Fleetwood plant and earned an hourly wage, with benefits, that was double the pay of any job he could get back home.

“It was Motown and Cadillacs, man, it was the good life,” said McGregor, now president of UAW Local 22 in Detroit, which represents GM’s Hamtramck plant, where the automaker plans to build the plug-in Chevrolet Volt beginning in 2010. “Nowadays, if you are a UAW worker, the life is still good if you’re still working,” McGregor said, “but, you know the economy’s changed. Not as many working as there once was.”

Last week at a Michigan Works! Office on Detroit’s east side, two former autoworkers, both African-American, were among hundreds looking for work.

“I gave up on making what I used to make — it’s too depressing to think that way,” said DreyLouis Paxton, 28, who five years ago made $18 an hour at an auto supplier assembling components for SUV seats.

That union job lasted for three and a half years before the company went out of business when SUV sales declined, Paxton said. He’s not made a wage close to that since.

Paxton was applying for an $8.50-an-hour job at a hospital with no insurance benefits. “I only got to beat out 300 people, and I don’t have experience,” he said, chuckling as he shook his head.

Levaughn Young lost his house in foreclosure recently, three years after he lost his job of seven years with an auto supplier outside of Grand Rapids. The 33-year-old lives in his in-laws’ basement, with his wife and two kids. He’s relied on construction work, but that, too, has dwindled. “There ain’t nothing close to that kind of pay,” he said of his old auto job.

At the union hall, McGregor said that what he finds startling is having to defend his wages to other blue-collar African-Americans.

“They get upset because they don’t have the same protections we fought hard to get and they sometimes take that out on us,” McGregor said. “I try to explain we are trying lift to everybody’s wages. We wanted to be the standard for workers rights and benefits that all workers — black, white, Latino — should try to earn.

“But instead it’s a race to the bottom.”

The Wall Street Journal reported Thursday that talks about a tie-up were resumed after Chrysler’s parent, Cerberus Capital Management LP, Chrysler’s majority owner, signaled it is willing to part with some of its stake in the automaker. The Journal later reported the talks were focused on combining GMAC and Chrysler Financial — though Cerberus owns a majority of both companies. The Journal said it is just one of a range of options the automakers are exploring. GM owns 49 percent of GMAC.

GM spokesman Tony Cervone said GM’s stance on the merger talks has not changed since the automaker announced on Nov. 7 that it had suspended them, saying the company was focused on improving its liquidity. He said there had been no ongoing merger talks between the two companies since that announcement.

Chrysler also denied the report. “There is no truth to the rumor. Chrysler is not in discussions with General Motors,” Chrysler spokeswoman Shawn Morgan said.

A Cerberus spokesman also would not comment.

A person familiar with the matter said GM and Cerberus do have ongoing talks about business matters, but declined to elaborate.

GM and Chrysler began talking in September about combining, but talks fell apart after the companies couldn’t raise enough money to finance the deal. Chrysler has reiterated it is still pursuing additional alliances or other partnerships.

The report emerged as the Bush Administration mulls options to provide immediate aid to the two the automakers after the Senate failed to approve $14 billion in loans for GM and Chrysler to prevent them from collapsing. An announcement from the White House could come by Friday.

President Bush said Wednesday a deal could come soon. “I’m thinking it through, you know,” Bush told Fox News. “It needs to get done relatively soon.”

Both GM and Cerberus have been in discussions with Treasury officials about the size and scope of an aid package.

The Treasury is expected to tap some of the remaining funds from the first half of the $700 billion Wall Street bailout package, the Troubled Asset Relief Program (TARP), but it hasn’t ruled out aid to ensure an “orderly” bankruptcy filing by the two automakers.

Automakers face sinking auto sales and have taken steps to reduce expenses and production. Chrysler said it will close all of its factories starting Friday for at least a month. Ford Motor Co. is extending its holiday shutdowns at 10 plants by a third week, while GM has postponed work on a $370 million engine factory in Flint.

Ford sought a stand-by $9 billion line of credit but says it has enough money to make it through 2009 unless the economy worsens.

GM chairman and CEO Rick Wagoner and Chrysler chairman CEO Robert Nardelli told the Senate Banking Committee earlier this month that they would be open to considering restarting merger talks if it were a condition of federal aid.

“I would be very willing to look at it seriously,” Wagoner said. “We are certainly willing to look at it and consider it very seriously.”

Sen. Robert Bennett, R-Utah, was one of several members who said a merger made sense.

“Everything I’ve seen suggests to me a merger between GM and Chrysler is a good idea,” Bennett said. “It’s a marriage that makes sense. All the work has been done. So it could be done. … Papers could be signed very quickly.”

Cerberus also had discussed a possible deal with the Renault-Nissan alliance, but the parties broke off those discussions last month. The Renault-Nissan alliance had proposed to bring Chrysler into the French-Japanese partnership, while GM had considered an outright acquisition of Chrysler.

This is especially important if the government is going to be bailing out any of the Big Three, who will soon be referred to as the “Broke Three”.

According to Warren Buffet, who is a special advisor to president-elect Barack Obama:

The government should insist top executives at Ford Motor Co., General Motors Corp. and Chrysler LLC invest a significant percentage of their own net worths in the Detroit-based companies, Buffett said, ensuring executives and taxpayers would share in any profits or losses.

A Chrysler spokeswoman said the company had no comment because it hadn’t heard Buffett’s interview. Ford and GM representatives were not immediately available for comment.

Buffett said the government should be able to drive a deal like one of the ones he makes when Berkshire buys businesses, because automakers appear on the brink of bankruptcy.

Buffett said he’d tell the auto executives, “‘We’ll give you more upside (than bankruptcy), but you’re going to lose if we lose.’”

Bankruptcy would be a poor solution for the auto industry, Buffett said, so he hopes a better way can be found to work out the union contracts and other issues the companies face.

He reiterated his belief that the U.S. economy will eventually recover from its current problems, but he predicted there will be more pain first.

“There are going to be more people unemployed. And I mean, I can’t think of anything worse than going home to a family, saying, ‘I lost my job today,’” Buffett said.

He said he expects the unemployment rate to continue climbing past 8 percent and he doesn’t expect the rate to start falling anytime soon.

Buffett said he thinks Treasury Secretary Henry Paulson is a “high-grade guy” doing a good job with an extremely tough situation as he tries to reinvigorate the economy.

“I don’t think I could have done a better job, and I don’t think most of the congressmen could do a better job,” Buffett said.

He said he doesn’t regret agreeing in September to invest $5 billion in Goldman Sachs, because he doesn’t think the investment bank would still agree to pay Berkshire the 10 percent annual dividend Goldman promised. Since Goldman announced Berkshire’s investment, it received $10 billion in assistance as part of the government’s $700 billion bailout plan.

Since Nov. 7, when Berkshire reported third-quarter earnings, its shares have fallen about 30 percent. Berkshire reported a 77 percent drop in profit and said unrealized investment losses of about $1 billion weighed on the results.

Class A shares of Berkshire, which are still the most expensive U.S. stock, were selling for about $82,450 Friday afternoon. The stock set a new high of $151,650 in December.

Buffett said he’s not bothered by the recent share-price decline, because he’s been through similar drops before and he values Berkshire based on its underlying businesses.

Under the program, selected models of GM received 3.9% interest loan terms for up to 60 months. The 4.9% incentive for higher end vehicles such as the GMC Yukon, Yukon XL, Envoy, Chevrolet TrailBlazer, Tahoe and Suburban were also scrapped.

GM claims it has had troubles raising capital in the past couple of months and was losing money on the program. Dealers are furious as the used car department provided much needed margins to their already failing new car sales departments.

GMAC also announced that it was scaling back it’s lending practices in Europe, while put a stop to lending in 7 European nations altogether. Last month, GMAC has announced that it will not be lending to individuals with a credit score less then 700, roughly 40% of all applicants.

GMAC is partially owned by Cerberus Capital and part by General Motors. Both of which have become under fire recently as the automotive sector sunk to new lows in terms of sales.

In the opinion of the newspaper, the Big Three employ too many people to be put into jeopardy in case either one of the companies fail. It has also brought up a very valid point, that the funding that has been made available to the companies in the form of re-tooling costs in the sum of $25 billion, will not be available to them for some time to come. This is due to the slow moving banking system and it’s legal teams to work out the details of the plan. In the meantime all three manufacturers are losing money every month.

Cerberus Capital Management LP the private equity firm that is burning through cash on all fronts, including losses at it’s finance unit GMAC, as well as through Chrysler LLC has been very keen to sell of it’s Chrysler holdings to General Motors. General Motors on the otherhand, would like a government infusion of funds in order to complete the purchase.

The newspaper clearly states, that there should be strict conditions on government lending should it offer to bail out the companies. Everything from not paying dividends, to the firing of all top executives has been brought up. The Federal Government is too busy at the moment getting the finance industry straightened out, after which it might focus on automotive.

It is important to note, that the companies that are affected by these bailouts are very much on the top of their foodchain, meaning secondary industries which supply them might fall as well should they experience financial hardship. This translates to millions and millions of jobs disappearing overnight and uneployment increasing.