Congressional Democrats looking to toughen up bailout proposal
Today's lame-duck Congressional meeting is going to be an important one for Detroit automakers, with House Democrats working on a $25 billion bailout proposal. Passion is high on both sides of the bailout argument, and Democrats are looking to toughen up a bill to help gain crucial votes needed for passage. Among the items being discussed is a taxpayer stake in any assisted automaker, additional restructuring and stiff restrictions on executive pay.
House Republican Richard Shelby is one of many leaders likely to vote against the bill no matter what stipulations are added. The Alabama Republican called Detroit Automakers "dinosaurs" that need to start over. He also called for management to go, but he stated that he wouldn't support a bill even if they did. Michigan Democrat Senator Carl Levin suggested that if GM CEO Rick Wagoner had to step down to guarantee aid, he should consider it. GM is pleading for a bridge loan both in Washington and on YouTube, where the automaker released a four-minute video explaining the importance of its industry.
President-Elect Barak Obama also chimed in on the automaker bailout situation on 60 Minutes Sunday, stating that the loss of Detroit Automakers would be a disaster for the country. Obama also insisted that any loan can't be a "blank check," and that industry leaders, labor, suppliers, lenders, and stakeholders needed to agree on a long term solution that shows that loans aren't merely delaying the domestic industry's demise.
[Source: Automotive News - Sub. Req.]
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Reader Comments (Page 1 of 3)
dougefresh 8:36AM (11/17/2008)
As much as I'd like to see an uncompetitive company fail (GM), I think Barack Obama has the right approach to this for this economic climate. I'm also curious to see what that "taxpayer stake" in an assisted automaker might mean.
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JZeke 9:38AM (11/17/2008)
+1
John 9:53AM (11/17/2008)
It would be nice if we could have at least one day on Autoblog without people cheering for American companies to fail. Keep cheering for that, your kids will thank you in 20 years when the only jobs available in the US are for $10/hour.
JZeke 10:54AM (11/17/2008)
Failure isn't absolute. Failure is an acceptance that the previous ways are over, and don't work. Failure leads to new growth, failure leads to fixing what broke.
Failure is a short term setback. Think of GM like a sports team. Every year, in every sport all teams fail except for one when it comes to the championship. But during the post season teams regroup, restructure, try different players, change strategies. Then suddenly the worst team in the league is the best.
No one wants to see GM disappear, but we're all pretty tired of their uncompetitive efforts and myopic perception of the world.
Kitko 11:01AM (11/17/2008)
John, try to look at the situation without the prism of anti-Americanism.
People do not wish for American companies to fall.
They wish, if at all, that GM would fall. They may have different reasons but I don't think they want it to fall because it's an American company (it's overseas branches are doing badly, though).
They just think that a fall/bankruptcy would finally force GM to re-invent themselves and behave responsibly towards their customers, employees and the USA. Because no matter what happens, it will always be America that will suffer - whether from millions of jobs losses or billions of tax-payers dollars poured in to prevent the former.
Steve_S 12:35PM (11/17/2008)
what JZeke said +1
geo.stewart 1:14PM (11/17/2008)
yes, we need CHANGE, as in lets move to Socialism and state sponsored companies. no one need fail, we'll jsut work the taxpayer harder.
Let GM and others go into bankruptcy and emerge stronger. ts been working for the airlines jsut fine. some have closed and some have gotten stronger.
Bankruptcy doesnt mean they end, just means those that pay for the restructuring are those engaged with GM rather than all us yahoos paying taxes.
happy_penguin 2:04PM (11/17/2008)
Why not change for socialism? At least then we'll be just like Europe and Japan, which everyone seems to think is so wonderful when it comes to cars. Let's be just like them!
EVan 2:18PM (11/17/2008)
It's not surprising to hear a politician from Alabama speaking against any aid to the Big 3. From the Economist, November 27th, 2003...
"Since 1993 Alabama has acquired three large car factories—the Mercedes-Benz one, a Honda factory in Lincoln, and a Hyundai arrival that is scheduled to open outside Montgomery in March 2005. There is also a Toyota engine factory in Huntsville. …"
To insist that Richard Shelby is more interested in the free market than his own campaign coffers is a joke and I wish some larger media outlet would call him out.
Foreign automakers will have to contend with a newly resurgent American auto industry if this bailout is effective and enables them to rebound. I'm certain they are donating a little extra to politicians in their corner to keep that from happening.
DesiAuto 8:52AM (11/17/2008)
Plan for GM:
1) CEO and rest of leadership team fired without any benefits
2) Create new leadership by promoting from within
3) Give them 37.5B with strings attached.
Plan for FORD:
1) Fire majority of executives except CEO.
2) Promote from within to replace inefficient/old executives
3) Give them 37.5B with strings attached.
Plan for Chrylser:
1) Let it die.
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Frank 11:32AM (11/17/2008)
Plan for Chrylser:
1) Let employees buy the company from Cerberus
2) Let employees/owners change mgt to people who will believe in the compny- Tom Gale and/or Wolfgang Bernhard would be a good start.
3) Watch company (with right leadership) come roaring back.
Tagg 4:37PM (11/17/2008)
Alot of the old guard at Ford already left. Thats part of the reason why Kerkorian sold off his Ford stock.
Ford already has a plan for the next few years and it's very product heavy and not reliant on any government money.
This isn't directed at you DesiAuto but just a point I want to add.
It drives me crazy when I hear that "the auto industry" is pleading for a bailout. GM is pleading for a bailout because it won't be able to meet payroll come March. Ford and Chrysler are just there to make sure if GM gets some pie they get a slice too.
robert bell 8:59AM (11/17/2008)
check out the whole article in the Washington Post. Noticeably absent from the "protections" for the taxpayer is any talk of lowering labor and legacy costs, which are at the heart of the problem facing the Big 3.
Yes, management was abysmal and, yes, some of them deserve to walk the plank but if we continue to ignore the 800 pound gorilla on the production line, these companies will be back, sooner than later, asking for more to subsidize a broken business model regardless of which empty suit is asking.
While the nation is in a relaive state of euphoria over the election of Barack Obama, let's not lose our objectivity and ask why is any discussion of sacrifice by labor and the UAW absent from the "change" and "reform" being asked for in exchange for a cool 50 BILLION? Could it have something to do with the 80 million or so labor contributed to Obama and the Democrats?
Any taxpayer who is serious about "saving" Detroit should do as I have done. Write your Congressman and Senators and demand that any government loan or subisidies be accompanied by some form of structured bankruptcy which allows for a renegotiation of labor contracts and the provision of fringe benefits. If these are not at the heart of a bailout package and plan, you will be calling for the new mangagement team put in place to be fired a couple years from now when they come back to DC for more of your money.
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Frylock350 11:02AM (11/17/2008)
The UAW has already negotiated a new contract with the automakers that included significant concessions on their part. We should quit expecting them to compete with a 3rd world wage and start protecting our middle class workers. A progressive "labor tax" on imported vehicles would erase the disadvantage GM/Ford have.
Alex 11:27AM (11/17/2008)
No one is asking anyone to compete with 3rd world wages. Toyota, Honda and other overseas manufacturers have factories in the US and they are paying good wages with no unions. In fact - life is so nice in these factories that unions have not been able to get their foot in the door with the workers.
A labor tax? Seriously, you even called it progressive. You are funny. Tarrifs only serve to introduce more tarrifs some where else. The US is not going to be able to tax itself or the auto indstry into prosperity.
happy_penguin 2:06PM (11/17/2008)
The only reason they're paying those good wages is to keep the unions out.
Jake 8:53AM (11/17/2008)
I am personally getting tired of this talk from the crooked politicians, incompetent corporate execs. and sleaze bag union bosses basically try to coerse me into this lowzey bail-out with the crisis, disaster, "we're all gonna die" talk.
The more they try to shake me down with these tactics, the more I think that this is just doom-and-gloom fear mongering and the more I want to say f-off.
Capitalism and the free market won't work effectively if stupidity and incompetence isn't allowed to fail. Government meddling only makes it worse.
I also wish Obama could say something freakin' intelligent about this. He doesn't offer any solutions, he won't take a position without waiting to see what everyone else does and tells him what to do. He is still in campaign mode crying and moaning about problems, blaming everyone but the crooked politicians in his own party and offering no solutions. And this naive, moron is about to be president.
Quit telling me how the world is going to end unless you spend more money that you don't have and leave me with the bill.
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Steve_S 9:03AM (11/17/2008)
He's not the president yet so he can't go on as if he was. Don't expect to see too many public "suggestions" being made until after Jan. 20th.
Red 9:32AM (11/17/2008)
@ Jake,
Maybe you should quit whining too, as you didn't come up with a workable solution either. Bitching like you're doing, you sound like a bitter McCain-Palin supporter, "still stuck in campaign mode". If you want Obama to "say something freakin' intelligent", perhaps you should show him the way by doing the same yourself, instead of whining and crying about "crooked politicians" and "naive morons".
Thanks a bunch.
BLS 9:25AM (11/17/2008)
Well there is no shortage of crooks and sleaze bags in the world. These sleaze bags happen to employ millions of people directly or indirectly. They are asking for a loan to make payroll (etc.); much like the loans that Barrack Obama mentioned in the debates. Due to adverse economic environment (housing = trucks, credit = car loans) they are unable to issue enough bonds to get the loan from investors therefore they are asking the governement.
The same democratic government wants another economic stimulus package.