'When you're before Congress saying you are running out of money, it would be shocking if the three of them (Detroit Big Three) had not been talking to bankruptcy counsel,' he said.

'Since bankruptcy has, for weeks, been a potential outcome here, it would be mismanagement to not be consulting bankruptcy counsel,' Conway said.

It's standard procedure and prudent to evaluate the consequences in a situation like this, he said, but, much like consulting a divorce lawyer, it's not something you generally like to make public, especially if it is an option you don't end up selecting in the end.

Chrysler falls under that category.

'The results of this evaluation determined the impact to the overall domestic automotive industry would be devastating,' Chrysler's statement said. 'This conclusion was confirmed by the Committee's independent expert witness, the economist Mark Zandi, of Moody's Economy.com. Bankruptcy at this point in time, would be cataclysmic for the economy.'

Chrysler CEO Robert Nardelli completed his second day of hearings before Congress today alongside his counterparts from Ford Motor Co., General Motors Corp. and the United Auto Workers union. He was under attack from senators in Thursday's testimony who criticized Chrysler's private equity firm ownership amid accusations that government aid would make Chrysler more attractive for a possible sale. Some of that criticism resurfaced again today.

Nardelli was forced to defend Cerberus Capital Management LP for not injecting more money into the automaker. Nardelli said Cerberus invested in its initial 80.1 percent share in Chrysler and drew down a further $2 billion mid-year.

In this time of further need, 'I have tried mightily to get funds,' Nardelli said, adding he assumes the equity fund, like others in this financial crisis, doesn't have access to more money.