• Nov 18, 2008
So here's a breakdown of what's going on in Congress concerning federal aid for U.S. automakers. A Senate bill expected to be voted on this Thursday would expedite funds for Ford, GM and Chrysler so that they could actually get the cash they need within 22 days after the bill becomes law -- should the bill become law. The $25 billion loan, paid back at an initial rate of 5-percent, would come out of the $700 billion bailout fund for financial institutions. The Senate's stipulations would be that the government receives "stock warrants or senior debt instruments to the government," similar to actions taken with banks that accessed the $700 billion. As well, top executives get no big payouts and stockholders get no dividends.
The rumblings on the track indicate that unless the folks in favor can change a lot of minds before Thursday, the Senate bill has little hope of passing. That makes it even more unlikely that a House version of the bill would pass, since it has even stricter requirements. The House bill would also get money for the automakers quickly, but would establish a Financial Stability Oversight Board that would have veto power over any auto company action that would cost more than $25 million. Who would be on that board and how would they be chosen? Who knows.

Latest word is also that the White House doesn't want to take money from the $700 billion bank bailout and use it for the auto industry. It would rather speed up disbursement of the $25 billion in low interest loans that was already approved for research into more fuel efficient vehicles and let the automakers use that for their current cash needs. The White House also wants, and the Senate bill requests, that Ford, GM and Chrysler give the Treasury "a detailed plan on how the government funds requested will be utilized to ensure the long-term financial posture of the company." Cue the dramatic music, some maniacal laughter and the late Vincent Price intoning: the plot thickens.

[Source: Automotive News - sub. req'd]


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  • 49 Comments
      • 6 Years Ago
      I'd be a lot more in favor of a bailout if the turn in fortune of the Detroit automakers were sudden. But, it isn't. The auto execs and the UAW have been conspiring against the public for a loooong time. In return for their patriotism, consumers have bought inferior cars, while shareholders have seen their investments slowly dwindle away to nothing.

      That said, I am really looking forward to buying a Fiesta or a Focus in the near future.
      • 6 Years Ago
      Why everyone have too pay for the wrong decision of these compagny, Why only the big three have those problems? After the bank, the automakers and after?who? These superb capitalist syst seem to communist.
      I ythink the uaw have to pay also.Never i`ll buy another product of the 3.
      • 6 Years Ago
      I work for an automotive supplier yet so I'm stuck in the middle on this. I like having a job and an income, but I don't understand what giving any money to the big three will do. How will a check to either of them make people want to buy their cars. This is a problem that will take much longer then 1 year and 25Billion to fix.
      • 6 Years Ago
      Can I sue the government to get MY money back? I NEVER authorized my money going to these bailouts.

      They are stealing my money at gunpoint and spending it without my consent.

      I want a refund.
        • 6 Years Ago
        Wow TJ... Wow...

        Its not collectivism at all!

        Collectivism = fully shared resources

        What is being discussed is instead, allocation of the resources that we have already agreed to pool AND what I am advocating is a targeted allocation of those resources so that long term we can REDUCE our individual allocations to that pool.

        Use your head man, logic is your friend, not catch phrases and scare tactics
        • 6 Years Ago
        "Collectivism = fully shared resources

        What is being discussed is instead, allocation of the resources that we have already agreed to pool AND what I am advocating is a targeted allocation of those resources so that long term we can REDUCE our individual allocations to that pool."


        Paul, you are twisting the definition of collectivism, and confusing it with genuine, full-blown communism.

        Secondly, 76 percent of all Americans disagreed with the 700bil, how can you make the claim we 'agreed' to that?

        Third, you refer to allocation of resources... we have no resources. We added 10 percent to the national debt in the last three months. We increased our nations debt by over ten percent, and you think we have resources? We have none... and as my post above indicates, it has been squandered on $818,232 for alternative salmon products (ted stevens) or $1,117,125 for mormon crickets (harry reid) or $846,000 for the Father's Day Rally Committee Inc. (Rep. Chaka Fattah)

        They need to clean up their own house before they attempt to squander billions/trillions telling industry how to clean up its house.
        • 6 Years Ago
        Paul:
        "People fail to realize that our system is set up in such a way that gives the government to do these things, in order to benefit the greater good."

        Wrong.

        Do not confuse 'common defense' with 'greater good'.

        The 'greater good' is not a philosophy excercised by the founding fathers of this nation, but rather by progressives and collectivists...as extensions of fascism, communism, and socialism.
        • 6 Years Ago
        TJ your libertarian ethos is blinding you to the reality of the situation.

        As a disclaimer: I am a libertarian at heart, however I consider myself a "Practical Libertarian." I think libertarianism is great, I also know that it would not work.

        The bottom line is we are not in an economy that accepts or utilizes libertarian concepts. We haven't been, generally, since WWII and specifically since Johnson and Regan. We are in an interventionist economy with socialist trending (note that does NOT mean we practice socialism here, it just means that on the scale we do trend to that occasionally). Getting back to a libertarian economy would take time and caution, doing so in one fell swoop would be disastrous and make the whole thing moot as we would swing even farther in the other direction.

        Play the scenarios out in your head a bit, with an ultimate goal in mind, be realistic, and see which makes the most sense. It wont be the three year old stomping their feet, taking their toys, and going home.
        • 6 Years Ago
        @Say what?

        I voted. I was just on the 49 percent side of the equation.
        • 6 Years Ago
        @TJ:

        Now you know how many of us on the other side have felt for the past 8 years as we watched our money flow to Iraq.

        Welcome to democracy. You lost this time.
        • 6 Years Ago
        Problem with that is that the taxpayers can not sue for misuse of tax dollars unless the gov is spending the money to set up a national church. The only solution is in the political process. If you don't like what your congressman is doing, then vote him out.
        • 6 Years Ago
        "THAT is what a government is. THAT is what civic responsibility means."

        Various States are established in different ways that represent different intentions of the founders.

        The United States of America was established in the belief of freedom from government, not subject to. This was established in the belief in individualism, not collective. This was an exercise in the removal of government interference from everyday life... an exercise that has been stripped and dismantled slowly over 200 years to the point that the current State reflects in no way, shape, or form the intent of the framers.

        Again, the collectivism you preach is an extension of the progressive movements from the early 20th century, who are deeply rooted in fascism (Mussolini), communism, and socialism.

        The belief in the individual, and individual freedoms should never be sacrificed for the 'greater good'.

        The government of the US was established in such a way that its only powers are those expressly given to it in the constitution. All other rights are reserved for the people. 'the greater good' as determined by legislature is NOT an express right given to the government.

        Thanks for the socialist civics lesson though. I will repeat 'from each according to his ability, to each according to his need' as many times as possible to avoid the reeducation camps.
        • 6 Years Ago
        @ Cornholio...

        Um... federal spending has more than doubled in the last ten years. Democrats controlled the white house for the first two of those, and controlled the house and senate for the last two. Spending has gone up substantially in the last two years...

        This is not a partisan issue, this is a spending issue... and both parties are spending like drunken sailors with my money, and yours.

        "In fiscal year 2008, Congress stuffed 11,610 projects (the second highest total ever) into the 12 appropriations bills worth $17.2 billion. The 11,610 projects represent a 337 percent increase over the 2,658 projects in fiscal year 2007. The $17.2 billion is a 30 percent increase over the fiscal year 2007 total of $13.2 billion. Only the Defense and Homeland Security bills included earmarks in fiscal year 2007, so comparisons of other bills are made between fiscal years 2008 and 2006. Total pork identified by CAGW since 1991 adds up to $271 billion."

        Get rid of earmarks for 09 altogether, send that money to Detroit. Problem solved. But no. That would be too easy. Instead, lets keep spending $7,556,660 for grape and wine research.
        • 6 Years Ago
        If you are an american citizen then you authorized it.

        People fail to realize that our system is set up in such a way that gives the government to do these things, in order to benefit the greater good.

        Keeping X millions of people employed and generated BILLIONS AND BILLIONS in tax revenue is absolutely for the greater good.

        If they are let to die, sure we save a 25 billion dollar loan today but the long term economic losses would be measured in the trillions, and the short term tax losses would be in the hundred billions.

        Guess what? Our tax dollars may go to the 25 billion dollar loan today, or have to make up that hundred billion + tax shortfall. Your call. I personally would take the loan.
      • 6 Years Ago
      while we argue like capitol hill, can anyone who actually works at GM, Ford and Chrysler check and see if their executives are still in office after 2pm?
      • 6 Years Ago
      I would much rather see my tax dollars going towards America's last great industry and helping to save it rather than sending it all to the banks who are largely responsible for the economic mess we are in now.

      You people seem to forget a few points:

      1. These are loans, they are not free money, they will have to be paid back.
      2. Other countries, like Japan, who actually give a crap about their industries help them out.
      3. You all seem quick to bash Detroit, as usual, yet you forget that many of the latest models like the Malibu, Corvette, Ram, and CTS are right their with the competition. There are a slew of even better products coming as well: Ford is bringing us cars like the Fiesta and next Focus, GM is bringing us the Volt, Cruze, LaCrosse and replacement, and Chrysler plans to bring at least one EV to market by 2010, along with a small car and revamped midsize cars, plus the all new, advanced Phoenix V6 engines. They just need the loans to survive this economic storm until the economy recovers and their new products come online.
      • 6 Years Ago
      ugh! Some of those companies need to fail. We should not reward them for making gas guzzling SUV's and fulgy unreliable cars no one wanted to buy!

      Unless they are forced to pay of current debts AND THEN use the money for making fuel efficient vehicles and hydrogen cars THEN I would support it.
        • 6 Years Ago
        Ah, the old GM doesn't make bad cars, they have bad customers logic.
        • 6 Years Ago
        @Doug,
        So in your world, there is no such thing as accountability. If a company puts all of its eggs in one basket and it blows up in their face, it isn't their fault right? Well now the public is demanding something else, face the consequences.
        • 6 Years Ago
        Oh yes, lets punish them for making the profitable SUV's and Trucks that the public DEMANDED for years before their sudden driving habit shifts, instead of the small cars that no one really wanted, or were willing to pay a profitable price for, until gas hit $4 a gallon.
        • 6 Years Ago
        JF you mean to say they make ugly and unrelible cars.
        • 6 Years Ago
        Fatima and others who can't seem to digest all the facts, try this.
        The big 3 focused on the big vehicles because that is what they could make a buck on and that's what the public wanted to buy, and what the retirement funds demanded.
        The big 3 could not make a profit on small cars due to higher costs ie. UAW wages, and improving the quality of their small cars just added to the profit issue.
        The big 3 proceeded to hammer out a new contract with the UAW recognizing that the world was changing and North American's didn't give a damm about sending tonnes of money to Asia.
        The new contract set the big 3 on a course for more profitable operations by 2010, while at least Ford and GM put serious effort immediately into quality, efficiency, style, and profitable small cars.
        A perfect storm of gas prices, housing and credit collapses then caught the big 3 in the midst of turning their big ships.
        The big 3 didn't cause any of these financial disasters, and if the disasters hadn't happened, there would be no need for any bailouts.
        If you want to blame someone, blame all the greedy consumers who want what they want..now, then pay for it on credit, and don't give a damm where its manufactured, or what the impact is on their future or that of their children.
        It's pay up time for everyone.
        If I had a vote on who pays, it would be everyone who buys foreign products, buys products they can't afford, and run up huge credit bills, or is in the UAW.

        • 6 Years Ago
        @Simian

        Well said. But the only problem is you apply logic to what the bailout crowd wants and they just refuse to listen.

        @Jeff
        Always a great way to make a point is to start calling people dumb. I get where you're coming from (insert your brand here) is the best because you think so and you're just going to call people dumb for not believing you.

        So why doesn't GM do anything about their hydrogen fuel cell car??? Honda most certainly has been working far above the curve and now has many hundreds of hydrogen fuel cell cars on the roads (which is a welcome start).

        Oh and how about the car magazines rating the Malibu higher than the Camary. Well that's great but why should anyone take the word from a company that takes money from the automakers to write articles.

        -Proud owner of a 07 Toyota Tundra, 06 Chevy Corvette Z06 & 99 Honda Accord.
      • 6 Years Ago
      I don't really see how giving them money actually helps the issue. The REAL problem is that people aren't buying their cars (or probably any cars).

      What about government sponsored loans, or rebates on American built (debate American company vs. American Built) cars to consumers?

      That way the companies move inventory, the suppliers continue to sell supplies, and money moves around the economy. Some cuts will still have to be made, but perhaps it won't be so bad.

      At least the consumers get direct benefit from this, instead of GM/Chevy et all deciding which creditors to pay first.
      • 6 Years Ago
      I live in Michigan.. I really don't think some of these auto executives get how bad this is effecting us. They need their head examined..

      UNTIL the EXECUTIVES & the UNION gets on the same page.. doesn't matter WHAT we do.. it's going to suck.
      • 6 Years Ago
      To those of you saying the big 3 need to cut salaries of the CEOs I want to know why? You claim they should be punished for their decisions, but Mulally has only been at Ford since '06, Nardelli at Chrysler since '07 and Wagoner since '98. What would this accomplish because even in they worked for free you only save millions at best. These companies are forced to spend in the billions monthly to survive. Who would stay if they weren't making the big salaries. Where is the motivation to work hard? These three men are highly successful individuals that choose to work for these companies. They could go work for other successful companies anytime they want and make great money. What intelligent person would want to turnaround an entire company for bad pay? If GM, Ford and Chrysler forced out their current CEOs they would be left with unqualified leaders. These companies have made great strides in a short time with very limited resources. The bailout money is just a loan to pay the bills until the economic downturn is over and they are profitable.
      • 6 Years Ago
      LOL.
      yes, let's blame American consumers for wanting to buy reliable high performing cars.

      this is not communism. you buy what you perceive as the best product for its value. America was built on building the best products. competition is supposed to make companies work harder and make better products.

      detroit is reaping the fruits of its labor.

      thank god other American industries like tech and medicine don't follow the detroit model.
      • 6 Years Ago
      The auto industry put themselves in this mess. We shouldn't be bailing them out. They saw the competition getting better and better for decades and they did nothing. In the past, they had riches and they had technological superiority. But rather than using those resources to making a better product, they continued to put out cars that break down every 3 months, that were technological dinosaurs and hope that advertising and ubiquity would continue sales. Now that companies (who did put resources into making better cars) like Toyota are dominating. I get enraged when I hear that GM wants to borrow money so that it can buy Chrysler because Chrysler has $8 billion dollars. They're buying another company to get its cash! How much of a waste is that???

      when the auto companies were rich cats way back when, their employees (all the way down to the factory workers) wanted their share of the loot. at the time, there was plenty so management agreed and now all their workers are way overcompensated for manual labor. Factory workers getting more money than our scientists, engineers, etc.

      And now they have to deal with a whole new generation of buyers that grew up on Toyotas, Hondas, BMW's, etc. I don't know anyone that'll ever consider an American car. Like they saw, fool me once, shame on you, fool me twice, shame on me.

      If we give them this money, we better own these companies in perpetuity. and we better make the CEO's work for $15/hour because that's all they deserve.
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