Updated from 3:02 p.m. EST

The automakers are not the only ones getting bailed out by U.S. taxpayers Friday -- so is Cerberus Capital Management, the massive private equity firm that is the majority owner of Chrysler and General Motors' ( GM) financing arm GMAC.

President Bush on Friday said GM and Chrysler would receive $17.4 billion in government loans from the $700 billion financial rescue fund Congress approved in October. The fact that Cerberus will not contribute further equity to these companies is sure to raise the hackles of many people who see private equity executives as little more than financial engineers who add little of value to the economy and, in many instances, contribute to a company's woes by saddling it with an unsustainable debt load.

"I don't think this is ideal policy," says Julian Zelizer, professor of history and public affairs at Princeton University. "But you're dealing basically with option one which is basically a jerry-built policy that's going to bail out some people who shouldn't be bailed out vs. large-scale bad economic effects from unemployment to more financial collapse and I think they're just saying in the short term, we can't afford option B."

Still, Zelizer believes Cerberus should take some kind of a hit.

"The idea that people in these executive positions and official positions should just receive the money and not be required to give something in return doesn't seem like a great course of action, so I don't see anything wrong with asking," he says.

GM will receive $4 billion on Dec. 29 and $5.4 billion on Jan. 16. It will receive $4 billion more in February, if Congress agrees to release the second half of the funding for the Troubled Asset Relief Program. Chrysler, meanwhile, will get $4 billion on Dec. 29.

Cerberus issued a lengthy statement Friday, arguing that it cannot contribute more money to Chrysler because it already had to get a waiver to invest 7.5% of its $27 billion. The firm said it has told its investors it would not put more than 5% of its assets in any single investment.

"Cerberus is not a deposit-taking institution that can act as an ATM machine for its portfolio companies," it says.

Additionally, Cerberus says it will invest the first $2 billion of Chrysler Financial profits back into the financing arm's parent automaker. Cerberus says the funding will back up the $4 billion loan Chrysler is getting from the government as part of its rescue package for the domestic auto industry.

But these steps are not going to be nearly enough to counter the impression that Cerberus, a $27 billion firm with stakes in a wide range of companies and a roster of influential executives such as former Treasury Secretary John Snow, is getting an undeserved handout.

Bill Cohan, a former investment banker who wrote a history on Lazard ( LAZ) and is wrapping up a book on the collapse of Bear Stearns, notes that Daimler wrote the value of its stake in Chrysler to zero, suggesting Cerberus' is also worthless. He expects its investment in GMAC is also near worthless.

"Their little foray into Detroit at the height of the market is a total cropper from my perspective," he says. "Calls by people in government to ask them to step up and put more money in is just so much theater and showboating."

But while Cohan doesn't see any point in asking Cerberus for more money, neither does he think the automakers should have received any from the government .

"Chapter 11 bankruptcy is an option here," he says. "Just because you file for Chapter 11 doesn't mean everyone loses their jobs. You can wipe out the ridiculous healthcare and pension benefits and paying people for not working and then maybe these companies can start to think about being competitive again. That's what Chapter 11 is for. Otherwise we're just propping up and rewarding bad behavior."
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