In the face of mounting opposition from Senate Republicans for his own party's Auto Rescue/Bailout Bill, Senate Majority Leader Harry Reid (D-Nev.) this morning told the lot of them to come up with something better. Freshman Republican Senator Bob Corker (R-Tenn.) thinks he has done just that, unveiling an alternative bill today that he says has support from within the auto industry. In exchange for the $14 billion in government loans, the bill lays out three conditions for Detroit automakers.
- Convert at least two-thirds of their creditors' debt to equity by March 31st, or either repay the loans or file for bankruptcy.
- UAW workers must accept the same pay, benefits and work rules as employees of import-brand factories.
- Half of Detroit automakers' payments into the UAW-administered VEBA funds for retired workers must be made in stock rather than cash.
Corker's plan allows automakers to use the impending threat of bankruptcy as a carrot to get their creditors and UAW to go along with more concessions. He argues that just giving Detroit money and promising to re-evaluate the situation at the end of March does not give those institutions enough incentive to play ball.
As for Corker's claim that folks within the industry actually support his alternative, there is no proof that's the case, or at least no one from the Detroit 3 has come forward to say as much.
This train keeps moving slowly forward, though it's becoming increasingly difficult to tell if our next stop is Bankruptcyville or Bailout Heights.
[Source: New York Times, Automotive News - sub. req'd]