Detroit Three pass credit check, $25 billion in gov't loans approved
While the U.S. banking industry is still waiting for Congress to give it a $700 billion hand, President Bush signed into law last night the spending bill that gives U.S. automakers $25 billion in loans to get their collective act together. But unlike when a bank deems you worthy of their money, the Big Three won't be getting any cash for some time. Despite the companys' CEOs saying repeatedly how they were desperate for help and how automotive life as they know it would end if they didn't get financial help, there's at least a 60-day delay until they can cash this check.
Written into the bill is a clause requiring the Energy Department to come up with regulations that will determine who gets what and when. The agency has 60 days to do this, but could take much longer, as much as 18 months according to a department spokesperson.
Desperate or not, looks like GM, Ford and Chrysler are now at the mercy of the Energy Department.
[Source: Wall Street Journal]
Reader Comments (Page 1 of 2)
Sean Flanagan 12:57PM (10/01/2008)
"The agency has 60 days to do this, but could take much longer, as much as 18 months according to a department spokesperson."
This is an example of why the government is broken.
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Ayatollah Rodriguez 1:13PM (10/01/2008)
No it's not. An example of a broken government is giving welfare to corporations.
Randy 2:16PM (10/01/2008)
@Ayatollah Rodriguez
Amen!
And I'll add that another example of broken government is not putting tariffs on imports and forcing your own country's manufacturers to cut corners instead having a fair playing field.
Note: We don't tariffs on imports to keep their prices inline with what domestically made goods cost which results in loss of jobs that are moved overseas, loss of manufacturing, loss of everything. It crumbles the system! It's simple freakin' math!
tekd 8:02AM (10/02/2008)
@Randy
Protectionist tariffs are great if you don't plan on every making any money selling stuff to other countries. In reality they'll just tariff our products, which means all those airplanes Boeing exports, all the industrial machinery GE exports, will all get taxed into oblivion as well.
All you'll end up accomplishing is that you'll boost the tax rates of just about every country's government, and slow down the economy of every country involved. Tariffs don't work.
And anyways, the United States is a country that was founded after a war about tariffs on IMPORTED tea! (I know it was about more than just tea but tariffs on imports were a big part of the revolution).
Richard 12:58PM (10/01/2008)
F all of us!
We have eliminated culpability from the halls of corporate America.
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Quattrofan 1:27PM (10/01/2008)
Agreed. This country is F.....D unless big business lobby is removed from Washington.
Quattrofan 1:28PM (10/01/2008)
Agreed. This country is ruined unless big business lobby is out of Washington.
Ligor 4:56PM (10/01/2008)
if hte big 3 go bankrupt the whole US economy will go to ruins, and we will have another great depresion in this modern era.
at that point you'd wish the gov't would have done something, so just be a bit more open minded.
afterall, it is a loan and not a gift.
how bout the Japan gov't giving a hand to it's companies, how's that fair to the big 3? how bout hte German gov't doing the same, then denying it happened
loans are nothing new, afterall if you even bought a house, you also loaned the money, and since this is suposedly hte richest country we should be able to affor loaning to companies in time of need adn not allow the rest of the world take us over.
I'm all for it, as the latest products from GM - CTS, G8, coming Cruse, Malibu have all been very nice and very comparable to other product offerings form Japan. The Malibu has been picked over the Camry by all major publications - be it in ride and handling or even quality
and this coming from a G35 owner, so you all don't be blabing import hater
Richard 6:03PM (10/01/2008)
anyone seen a Malibu ad on the telly lately?
Me neither.
The problem with this loan is that it artificially makes The big 3 competitive while it does nothing to decrease the cost structure that prevents them from breaking even - even when they build a product that has parity with the Camry, Accord and Legacy. So - in the end - it is another bandaid that lets Rick Waggner (sp) carry on with the bunk.
thedude 12:59PM (10/01/2008)
There used to be a concept that worked in a free market society. Businesses that made lousy products would die out because they made no money. These businesses would then be replaced by companies that DID produce products that people wanted.
Instead the government now bails out everyone and creates a mutated socialist state.
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akboss 1:11PM (10/01/2008)
We throw around big numbers in commerce today, but when you count the pennies, $25 Billion is a lot of money - where exactly is this coming from? If this isn't the miracle that the Big Three are expecting, what happens to that huge loan?
chrisdavis 4:37PM (10/01/2008)
Governments and free markets have never co-existed.
Gstill 1:28PM (10/01/2008)
For where the economy is right now, I don't think American companies would be selling many cars even if they were well-made and fuel-efficient. A lot of this is predicated on the fact that the economy will bounce back in a relative amount of time and people will buy new cars again soon.
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Mike 1:27PM (10/01/2008)
Bye Bye America.
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notYou 9:39AM (10/03/2008)
They must not have seen Ford's numbers today (-~35% in Sept).
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Todd in Sonoma 1:42PM (10/01/2008)
So, will all of this inflation finally wipe out my student loans?
I can't wait.
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Brandon 3:11PM (10/01/2008)
No, because your salary won't increase either.
BoxerFanatic 1:47PM (10/01/2008)
I, for one, do NOT welcome our not-so-new socialist overlords.
This is an abomination from several angles.
Welcome to the destruction of the free market economy. (and please don't bother trying to equate free trade with free markets. They are NOT the same thing, and deal with different aspects.)
The death of the free market, giving way to government controls, will also herald the death of freedom for people. If people can't do business freely, the rest of it is quicker to fall to the government, as well.
John Adams, Thomas Jefferson, Washington, Lincoln, Reagan, and probably MANY others are looking down on this, and they don't recognize it as America.
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Bob 2:14PM (10/01/2008)
I'm really sure that are founding fathers would love to see American industry essentially taken over by another countries industry that is basically subsidised (read:Japan) by their own company. Right.
In light of that fact, it's clear that this, coupled with all of other Govt. regulation that has been piled on these companes (read: new fuel economy standards), that the $25B is much needed.
TJ 2:53PM (10/01/2008)
Hey Bob... if the domestic automakers need a leg up, lets compare options.
Plan A.
1) Give them $25,000,000,000 in taxpayer money. After all, we are $10,000,000,000,000 in debt, about to add another 10 percent on top of that, AND running at a current budget deficit for this year alone at $400,000,000,000. Seriously. Whats another $25bil bills on top of all that!
Plan B.
1) Reduce the corporate tax rates. Let the companies keep more money to put more money into R&D
2) Create a slush fund. Impose an import tariff on foreign made automobiles where production is more than 80% completed outside of the US, Canada, or Mexico. (and I am iffy on the NAFTA thing too...) Any funds collected in conjunction with this tariff go directly to the slush fund. This fund will be applied to a joint research and development facility where the best private sector engineers and scientists work together for increased technology.
Which sounds better to you?