BREAKING: Automakers to get $15 billion in federal loans
by John Neff on Dec 5th 2008 at 10:12PM 
It's taken two rounds of Congressional hearings, some major pride swallowing and three detailed business plans, but it looks as if the Detroit 3 will be getting the federal loans they need, though not as much they asked for. A deal was reportedly reached between Democratic leaders and the White House that will supply around $15 billion in federal loans to the struggling U.S. auto industry. While General Motors, Ford and Chrysler asked for a combined maximum of $34 billion, the $15 billion is designed to ensure they stay alive until March when the issue will be readdressed with the input of a fresh Obama administration. GM and Chrysler reportedly need around $11 billion to survive the new year, while Ford has said it would only need government aid if one of the other two went under.
We're hearing that a deal was reached between Democrats and the Bush administration late Friday after top Dem. Nancy Pelosi gave in to the White House and its position that the money should come from $25 billion in loans previously approved to help the automakers retool for energy fuel efficient vehicles, rather than drawing the aid from the $700 billion Troubled Asset Relief Fund for struggling financial institutions. In return, Pelosi is seeking a guarantee that the money would be replenished in "a matter of weeks."
Both the Senate and House of Representatives have confirmed they will be meeting on Tuesday to vote on the deal, and it's expected that strong oversight of how the loans are used, whether in the form of an individual car czar or committee, will be part of the final package.
Party on, Detroit.
[Source: Reuters, Photo by Brendan Hoffman/Getty]
Reader Comments (Page 1 of 7)
Matt 10:52PM (12/05/2008)
Between the three.
GM has said they need roughly $10B to survive until March 31st, 2009, and Chrysler $4B. Ford needs nothing, as Mullaly remains bored.
Also, holy shit, it actually happened.
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Luke 10:52PM (12/05/2008)
Wouldn't one of the other two failing help Ford? The reduced competition would boost their sales, right?
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Sandeep 10:56PM (12/05/2008)
No.
They all use the same suppliers, who if they lost the business of one of the Big Three, would go under and disrupt the production of the others and cause cost overruns.
It's the same reason Toyota, Honda, et all who produce in the USA are worried if one of the Big 3 go under, because they too will be affected.
David 9:40AM (12/06/2008)
Actually, Toyota and Honda were against the bailout from what I heard. Also, a lot of suppliers supply only to one company and they've already lost A LOT of jobs. Get your facts straight, please.
Tagg 10:30AM (12/06/2008)
David,
You need to get your facts straight and not rely on what you "hear".
Toyota and Honda were at first against this but they also realize that 1 in 10 jobs are tied to the domestic auto industry. If those went away Toyota and Honda would lose billions. Besides, they have been subsidized in the past so it cuts both ways.
On the supplier side I'm curious where you heard that suppliers only supply to one company? Ford buys radios from Delphi, transmissions from Aisin (yup, same Aisin as Toyota, GM buys parst from Denso, almost all of them buy lights from Osram/Sylvania, suspension bits from Bilstien and on and on.
There are more parts makers than Delphi, Visteon and Aisin and they supply to whom ever will buy from them.
You really shouldn't call people out about their "facts" and telling them to get them straight when they already are.
rjj 10:28AM (12/06/2008)
They weren't against the loan they were against the original 25B alternate energy research/retooling money.
Auari 10:58PM (12/05/2008)
I've happy GM is getting a small lump of Sum. but I'm furious that Chrysler is getting a dime.
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MemphisNET 12:19AM (12/06/2008)
Mercedes bled them dry, they're about 6-12months of REALLY showing their turn around, they DO deserve a chance to continue.
I just wish Cerberus would disappear.
KT 10:58PM (12/05/2008)
No. It would cause the supply chain to fall into more trouble than it already is. Thus causing Ford to possibly stop production and that's not good.
It's $15b for GM and Chrysler. Ford doesn't need the cash right now.
It's amazing that AIG and Citi can get over $200b without answering ONE question and it's a monumental struggle for the automakers to get less than 10% of that.
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David 11:07PM (12/05/2008)
My guess is that the reason the automakers struggle to get even 10% of the bailout that the banks get is because they have lined the pockets of the congressmen with less than 10% of what the banks have.
carlbolt 5:13PM (12/06/2008)
Because the real economy is sunset economy, and no other industries can make billions and billions money by merely clicking a mouser button like the financial sector does.
dc11 11:00PM (12/05/2008)
sooooooooooooooooo i have a friend that has a failing business... its a mom and pop business, which if one fails, everyone else on the street fails.. soon the neighboring towns will have failing stores such as this,.. the destruction will be worse than walmart coming to a small town. in the end, millions of people will be unemployed all across the heartland...
can we get a bailout too? it wasnt their fault they sold at prices higher than walmart and did not adjust their business plan to suit the times....
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suitcase nuke 11:26PM (12/05/2008)
I don't see why your friend shouldn't be bailed out, free money for everyone.
SPF 11:11PM (12/05/2008)
Get some tumbleweed in stock ASAP.
jv2k 11:12PM (12/05/2008)
I dunno, does your friend employ millions of americans and sell millions of products around the world?
Red 11:39PM (12/05/2008)
I can't tell if you're sarcastic or not. This money comes from the money already allocated for retooling for more efficient vehicles.
Those same thousands of small businesses rely on larger businesses, such as auto plants, etc, for customers. See Moraine, Ohio, for example. I believe in a free market, but this isn't a free market. GM, Ford, and Chrysler have intertwined themselves in such a way, I hate to say this, but because of the relationship with Detroit's financing arms, the small mom and pop places are going to have to suffer a little longer. A large part of the blame still lies with the Detroit 3 for in a way, holding America economically hostage.
Scott Empringham 11:05PM (12/07/2008)
You make a good point. What assurances are there that they'll change their ways? Honestly, as a supplier to all of them, I'm rooting for them. I buy their cars and love a lot of the folks that work there...but I sometimes wonder what the motivation is to make major changes when they get the money? For instance, a couple of the Big 3 are investing heavily (and subsidizing) internal digital marketing programs, that could be outsourced for HUGE savings (Millions of dollars per year). Why don't they? Because the OEM's are making a profit. From who? The dealers they're attempting to serve. It's a sad state of affairs. I'm hoping for the best...but conservatively optimistic.
Torrent 11:01PM (12/05/2008)
srsly, 15 billion is hopefully just a start and will get the rest once Congress sees progress.
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letstakeawalk 11:09PM (12/05/2008)
This is a great band-aid to get the automakers throught the next few months.
All they were asking for were the funds to reimburse them for the costs related to infrastructure changes required for producing the new generation of vehicles. Hopefully, the Volt will live up to its potential (haha).
This is also good news for GM suppliers like Quantum Fuel Technologies, who's been working on the hybrid drivetrains behind the Hy-Wire concept - and the luscious Fisker Karma.
"What's good for GM..."
Rob 11:14PM (12/05/2008)
Hopefully it's not "just a start" and they won't need anymore money. Wishful thinking I guess....