• Dec 11th 2008 at 5:43PM
  • 59
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.

  1. Convert at least two-thirds of their creditors' debt to equity by March 31st, or either repay the loans or file for bankruptcy.
  2. UAW workers must accept the same pay, benefits and work rules as employees of import-brand factories.
  3. Half of Detroit automakers' payments into the UAW-administered VEBA funds for retired workers must be made in stock rather than cash.
Efforts by the White House to convince Senate Republicans that the bill already passed by the House is the right way to go have seemingly hit a brick wall. At this time, it is not believed that Democrats could muster the required 60 votes for passage in the Senate if the bill were voted on in the next few days.

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]

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    • 1 Second Ago
      • 6 Years Ago

      I was talking with my aunt and uncle at a family gathering this past weekend. My uncle drives a Chevrolet, and my aunt has both a Toyota and a Buick. Neither one of them are "in the know" as far as automotive things go. They, like alot of people, don't really do a whole lot of research when buying a new car. They just test drive a few different cars, and buy whichever one suits their fancy.

      They were asking me about "this whole bailout thing", because they know I'm a car-nut, and that I follow this stuff. They have been watching the news, and they both said they had no idea that American cars had such a negative stigma attached to them, and asked me why this was so.

      I proceeded to tell them that the "Big 3" made some questionable decisions in the past, and released a few turkeys. To which my uncle replied, "like the Vega?" (he used to own one). I then proceeded to tell them about all of the clueless lemmings out there that still believe that Asian cars are somehow far superior in every way, and still think that American cars are "crap". You know, the people who would trip over eachother to buy a Yugo if it had a Toyota badge affixed to it.

      This got me to thinking. Ya know, if I didn't read all of these car magazines, and read all of these automotive related web-sites, I would probably have no idea that American cars were percieved to be inferior. I have had several different makes of cars, both Japanese and American, and, to be completely honest, none of them were better than the other. Oh yes, I will admit that the interior in my old Scion TC was MUCH better than the interior in my '82 Cutlass that I had in high school. As far as reliability is concerned, I really haven't had any major problems with any of my cars, and I tend to put ALOT of miles on my vehicles.

      I know there are people that have had bad experiences with American cars, but I also know alot of people that have had bad experiences with Asian cars aswell, especailly Toyotas.

      I will admit that there are some current new cars from the Big 3 that just don't stack up, like the Aveo, Cobalt (excluding the SST), American market Focus, and pretty much ALL of Chrysler cars, but none of these cars are inherently "bad" or "crap", they are just lackluster in their class, but still reliable transportation.
      • 6 Years Ago
      This sudden HALT to the bail-out plan was reported 3 days ago on some more/less underground sites on the web. It claimed (BEFORE it happened) that certain Japanese automakers (T and H) were donating 23 million to the Republican Party to stall and de-rail the bail out funds to Chrysler, Ford & G.M. Within 50 hours they had pretty much done it. This AM 12/12/08 it became real, and the bail out seems to be resting on George Bush's desk. I have never and will never own any Jap-Crap car. They play dirty politics and stack all cards in their favor and they want nothing more that the demise of the "Big 3" and have wanted that for years, now.
      No decent American should support anything T & H want as it's all about over throwing the USA's products,and hurting any products and success in ANY field where japanese products compete!
      Other countries play ball fairly, here in the USA - they sell products & goods here and are fine with sharing counter space with American products. ONLY the Japanese Auto industry wants to snuff out the American competition and have the whole thing look like the domestics did it to themselves, which is simply not true.
      (and) NOW they DO have the money to alter influential decessions to go their way, thusly you now have the train wreck of bail out $$$.
      You did not see this with the 700 mill that went to Wall Street. You did not see this the the huge bailout to the Airline industry a few years ago.....because "they" were not involved in airlines, but the Domestic Auto Industry, whom was to get the SMALLEST amount of bailout $$$$ is now being challenged, simply because T & H don't want the "Big-3" to make it. They are actually paying 23 mil to halt it in hopes that GM will tumble and fail. It's called "Buying Time"
      T & H really suck, big time. I will never ever by their cars. Sticking with my Cadillacs & Lincolns, and keeping the $$$ right here !
      I welcome their competition, in our free market. I do NOT welcome their underhanded, behind the scenes, dirty practices, to come here & kill our corporations with laws and decessions that favor them, and them alone, obtained by huge sums of $$$ to sway our decesion maker's minds !!
      They "T" need to start by PAYING TAXES to the state of Kentucky on their assembly plant there as well as local & school taxes there on their huge plant.
        • 6 Years Ago
        @Sandy: How about some web links to these underground sites, so the rest of us can see it for ourselves? I'm skeptical, but willing to keep an open mind on this if there is evidence.
      • 6 Years Ago
      Seems like that's a lot of giving by the UAW and the creditors without holding the Big-3 managers and leaders accountable for their actions.

      How do the Republicans expect to get enough votes, when everyone agrees that the management was a large problem of why they're where they are in the first place?

      Either there's a lot more to it than just what was in the article, or the Republicans are setting themselves up for the moral hazard argument that they were using against bailing out Wall Street.
      • 6 Years Ago
      If Toyota or Honda were in a similar situation do you doubt for a second that Japan wouldn't do everything it could to keep their auto makers alive? I really can't understand this insane GOP backlash against helping the last significant manufacturing base in the USA. The reason the cars companies are in such dire straights right now is because the banks are refusing to give auto loans to most buyers. Remember that 700+ billion that we gave to help "ease" the credit markets? Instead of doing what they said they would do, they are spending all that money buying other banks. It's just insane, and no one seems to care, least of all the GOP anti-union asshats...
        • 6 Years Ago
        "If Toyota or Honda were in a similar situation do you doubt for a second that Japan wouldn't do everything it could to keep their auto makers alive?"

        Actually the Japanese government already works very hard to ensure the success of their auto industry, we're the only ones who really hang our domestic companies out to dry. Of course with VEBA, the bridge loans and a national healthcare system like every other industrialized nation has, Detroit should be able to do just fine on their own.
      • 6 Years Ago
      And I VOTED For this Idiot!?! What the HELL Was I THINKING!?! I'll NEVER Get a Job Now!
      • 6 Years Ago
      Not a bad start for a plan. Either Corker is a genious or completely asinine. The terms effectively screws shareholders by diluting their current ownership and the union membership with lower wages and retirement benefits. My only concern is if the tax funded money is converted to stock and the stock drops further. I could support this plan if the taxpayer gets first dibs on the assets in the event of a bankruptcy.
        • 6 Years Ago
        That would be the death knell of capitalism. Who's going to want to invest in a company if the government can sweep in and go right to the head of the line, ahead of all the other stakeholders? That's what Prof. Altman was saying at the congressional hearings.
      • 6 Years Ago
      The only part of this plan I agree with is this part:

      "2. UAW workers must accept the same pay, benefits and work rules as employees of import-brand factories [in the USA]." [my brackets]

      The rest of it is rather silly. I still say that the plan should look more like this:

      1. Shut down the weak brands in the GM family, including (as possibilities) Buick and GMC, and also possibly Hummer.

      2. UAW workers must accept the same pay, benefits and work rules as employees of import-brand factories.

      3. The government will give the Detroit Three a provision that it will pay out their current auto warranties in case of a bankruptcy.

      4. Management must accept pay cuts effective immediately.

      5. In the event of a bankruptcy, the executives will receive no "golden parachute".
      • 6 Years Ago
      • 6 Years Ago
      This is just retaliation to the UAW for helping to elect Democrats in 06' and 08' election.

      Its funny how hard the Republicans are trying to screw middle class workers but not so hard to give away Billions to Wall street.

      Mr. Cocker Sucks as hard as his points.

      You cheerleaders for failure seem to forget this won't only hurt the Big 3 & Unions but also will hurt their suppliers which are already facing tough times.

      I guess the only thing Republicans are good at is mucking things up.

        • 6 Years Ago
        I'm glad the Democrats have done such a great job at running things and their hands are so clean. I mean hell, they've done such a great job running the city of Detroit for the past 30 years (near or at the top in every violent crime stat). How have Chicago politicans fared in terms of honor and dignity?

        When it comes to politics neither is exactly the moral compass of which to judge by.
      • 6 Years Ago
      I really agree with point number 2. It seems hardly unfair that Toyota, Honda, BMW and whoever else has a factory in the states, can build cars and hire American workers that are not part of the UAW. I know it's the big three's won fault that they have the UAW own their butts all the time, but if the UAW is going to have its hand in Detroit it should also be in the import factories as well. I'm sure some piece of crap lobbyist arranged that deal.
      • 6 Years Ago
      The bailout scheme is moving closer to a prepackaged Chapter 11 bankruptcy, which is what it should have been in the first place.
      • 6 Years Ago
      You go Republicans!

      I like GM and opposed bankruptcy at first, but I believe it will be for the best. It will erase the legacy of the 70s without allowing the government more power to turn the Big 3 into British Leyland.
        • 6 Years Ago
        It's a stupid plan, you don't cross the unions (mob) unless you want to end up dead.
        • 6 Years Ago
        And We know what happened to THAT British Mess of a Car Company...
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