• Oct 1st 2008 at 12:31PM
  • 26
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]

I'm reporting this comment as:

Reported comments and users are reviewed by Autoblog staff 24 hours a day, seven days a week to determine whether they violate Community Guideline. Accounts are penalized for Community Guidelines violations and serious or repeated violations can lead to account termination.

    • 1 Second Ago
      • 6 Years Ago
      At least it's a loan, and not a grant. I'm not happy with it, but it's better than it could be.

        • 6 Years Ago
        I'm sure they'll pay it all back in 25 billion years.
      • 6 Years Ago
      I do not understand how everyone can be so against the government loaning money (with interest) to the Detroit automakers.

      If you think it is a waste of your tax payer dollars, how much do you think you will pay (and it WON'T be a loan) to support the unemployment of everyone in the US who has a job related to the Detroit 3? And then the cost of your house goes down because more people cannot afford their mortgages, and then your retirement savings is worth less because of all the stock in the companies that do business with the Detroit 3.... and on and on.

      I'm a first time home buyer, and I have an FHA mortgage. I've made every payment on time, mind you, but it's a loan backed by the federal government. Just as this would be.

      We see so many foreign companies prosper who get assistance from their federal governments, not just in loans and grants, but relief in the form of health care as well.

      The way many of you talk, it sounds as if you want the Detroit 3 to go out of business. As someone who's proud of our country, and strives to purchase "made in the USA" products, regardless of the commodity, I propose that the attitude you convey is what is currently wrong with America.
      • 6 Years Ago
      It's amazing the amount of ignorance that flows from some posters.

      If you bothered to do ANY research on this you would find out that it is available for ALL manufacturers and suppliers...not just the domestics.

      And since when is a loan a bailout? A bailout is what the Wall Street fat cats are getting.

        • 6 Years Ago
        Actually, it doesn't take a lot of research to find out that the loan is for all DOMESTIC" automakers and suppliers. I really don't have enough fingers or toes to count the number of times "Domestic" and "US" are mentioned in virtually every news story about the loan.

        So, you are half right, it's not jsut the domestics(i.e. the Big 3), it includes the suppliers as well.

        But, you are flat out wrong if you are implying that it covers import automakers as well.
      • 6 Years Ago
      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.
        • 6 Years Ago
        Governments and free markets have never co-existed.
      • 6 Years Ago
      What needs to happen is for everyone to keep buying imports.... STOP BUYING ANY DOMESTIC VEHICLE.. that way. the big three will go bankrupt, you will all be happy and all our import auto makers will JACK up the prices since there is no competition.

      People.. Get real.. Those GM Haters that can't see past their noses ought to step into a showroom and AT LEAST drive the vehicles. Your perspective WILL change and so will your behavior.

      Take care.
      • 6 Years Ago
      Say it ain't so. Congress screwing something up?

      No, I don't believe it. Not Congress.

      I'm running for President in 2012. My campaign platform? "Take a chance on Jeff, he can't be any worse!"
      • 6 Years Ago
      Bye Bye America.
      • 6 Years Ago
      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.
      • 6 Years Ago
      F all of us!

      We have eliminated culpability from the halls of corporate America.
        • 6 Years Ago
        Agreed. This country is F.....D unless big business lobby is removed from Washington.
        • 6 Years Ago
        Agreed. This country is ruined unless big business lobby is out of Washington.
        • 6 Years Ago
        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
        • 6 Years Ago
        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.
      • 6 Years Ago
      So, will all of this inflation finally wipe out my student loans?

      I can't wait.
        • 6 Years Ago
        No, because your salary won't increase either.
      • 6 Years Ago
      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.
        • 6 Years Ago
        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.
        • 6 Years Ago
        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?
        • 6 Years Ago

        I mostly agree with you.

        I'm not sure on lowering corporate taxes, the citizens would have to pay the difference.

        In regards to NAFTA I'm perfectly ok with the relationship with Canada. Canada's standard of living is pretty much the same as the USA's and they have a first world unionized workforce, etc. In addition they accept GM/Ford as domestic and are more loyal customers to them than Americans are. The problem exists when there is a disparity such as the USA and Mexico.

        Ideally if its not an American company building here, its unacceptable (and I won't buy non-American made or owned brands/vehicles), but tariffing anything imported is a start.
        • 6 Years Ago
        On lowering taxes...

        Lowering taxes spurs growth, and raises revenue. a smaller percentage of MORE money, can still be quantifiably more than a higher percentage of less money.

        It is not a zero sum game.

        and here is the big kicker.... Everybody is having to tighten the belt except one group of people. CONGRESS.
        They are spending like there is no tommorrow, and they are the ones putting tommorrow at risk by it.

        How about the US CONGRESS doing what is best for the country, cutting THEIR spending on social programs that are not their purview under the Constitution, or cutting them off completely, and cutting the taxes in this country, and letting the free market work.

        The US Congress is what has generated this HUGE problem, including the much larger problem of entitlement programs that is still coming down the pike, not the free market, no mater what the lying @#(*@#$ in Washington say. Why should we let them continue with MORE of our money? Anywhere else, they would be fired and then arrested for what they have done.

        If the US congress were to take a populace-mandated GIANT sidestep out of the way of the American people, and let people keep their money, and do their business, we would be out of this problem much faster than any government program could be set up. And government programs are certain to fail, based on prior performance.

        CITIZENS ALREADY PAY THE DIFFERENCE. Corporate taxes are not payed by corporations. They are paid by clients of corporations, and they are put on the expense sheet, and moved down the line into the price of the goods and services that customers buy. Part of the price of new cars are the corporate taxes of the companies that build new cars. The customer pays the tax indirectly already.

        Cutting the corporate tax rate, and the capital gains tax rate will be like putting oil in an engine that is running dry right now. If we don't put some oil in NOW, there will be damage to fix later. (there possibly already is.)

        But instead, Congress and the President are behind the wheel, and saying... don't put oil in the engine, just add more throttle, and the grinding noise will go away!
      • 6 Years Ago
      I am depressed by this news, although I expected it.

      The Big Three are liable for their own problems. A great deal of America stopped buying from them because a great deal of America found better alternatives. General Motors failed to bring these buyers back because its initial offerings in response, the Vega for example, were so miserable by comparison. They continued to make mistakes in the form of cars like the Cavalier, which failed to compete with their rivals, and though they have improved greatly, in the form of vehicles like the Cobalt, they are even today not quite at the same level as other offerings.

      I realize that at this point I have acquired the role of "GM hater" by a few people on Autoblog for various things I have said. I will not argue this because it is a ridiculous assertion. If I thought it were possible for GM to fix itself in the long term, and if I seriously believed that GM's problems could be fixed by a bailout, I would support it. I do not believe a bailout will fix this company. Money is not GM's biggest problem, GM's biggest problem is leadership, specifically a lack thereof, and GM seems hell-bent on making sure that its leadership is not made accountable for its lackings.
    • Load More Comments