Autoblog http://www.autoblog.com Autoblog http://www.blogsmithmedia.com/www.autoblog.com/media/feedlogo.gif Autoblog http://www.autoblog.com en-us Copyright 2009 Weblogs, Inc. The contents of this feed are available for non-commercial use only. Blogsmith http://www.blogsmith.com/<![CDATA[Gov't rejects automaker restructuring plans, new deadlines set]]>http://www.autoblog.com/2009/03/30/govt-rejects-automaker-restructuring-plans-new-deadlines-set/http://www.autoblog.com/2009/03/30/govt-rejects-automaker-restructuring-plans-new-deadlines-set/http://www.autoblog.com/2009/03/30/govt-rejects-automaker-restructuring-plans-new-deadlines-set/#comments

President Obama has just finished his press conference on the government's determination of the viability of General Motors and Chrysler, and the gist is that both automakers have failed to convince the feds that their business plans deserve further investment. Obama and his task force will give GM enough working capital to survive another 60 days and prove its viability, though no dollar amount was given. Chrysler, meanwhile, is being given another 30 days and working capital up to $6 billion to finalize a partnership deal with Fiat. If a deal can't be made and another partner is not found, Chrysler will get no more federal aid. Also, Fiat won't be allowed to take a majority stake in Chrysler until the automaker repays all the money it has borrowed from the government so far.

Perhaps the biggest news from the press conference is that the U.S. government will now fully back the warranties on vehicles sold by General Motors and Chrysler in the hopes that buyers will continue to consider their products amidst these tumultuous restructuring efforts. Also, the President has pledged to work with Congress to find funds to pay for a U.S.-version of the Cash for Clunkers program that has been so successful in Germany.

Follow the jump to take our poll and for official responses to the President's speech by both General Motors and Chrysler.

The Truth About Cars has also compiled all of the government's official documents on today's announcements.
[Photo by JIM WATSON/AFP/Getty]

Continue reading Gov't rejects automaker restructuring plans, new deadlines set

Gov't rejects automaker restructuring plans, new deadlines set originally appeared on Autoblog on Mon, 30 Mar 2009 12:25:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>auto bailoutAutoBailoutchrysler bailoutChryslerBailoutgm bailoutGmBailoutobamapresident obamaPresidentObamaMon, 30 Mar 2009 12:25:00 EST<![CDATA[Total Bailout Bill: $97.4 Billion, with a 'B']]>http://www.autoblog.com/2009/02/20/total-bailout-bill-97-4-billion-with-a-b/http://www.autoblog.com/2009/02/20/total-bailout-bill-97-4-billion-with-a-b/http://www.autoblog.com/2009/02/20/total-bailout-bill-97-4-billion-with-a-b/#commentsFiled under: , , , ,



With all the rescue/bailout talk going on here at Autoblog and, oh, just about everywhere else, you may find that it's tough to keep up with it all. Thankfully, the scribes over at Detroit Free Press have consolidated the discussion down to one easy-to-read but tough-to-comprehend figure: $97.4 billion. That's the total you get when adding up the initial $25.4 billion that automakers were promised to help retool their plants to build more fuel efficient cars; the $25.5 billion that auto suppliers have banded together to seek from the Feds and the $39 billion in loans that General Motors and Chrysler have requested from the feds to stave off a worst case scenario.

Of that $97.4 billion, a total of $24.9 billion has already been paid out to General Motors, GMAC, Chrysler and Chrysler Financial. If the entire amount were paid out, every American would then have contributed $874 to the auto rescue/bailout.

[Source: Detroit Free Press]

Total Bailout Bill: $97.4 Billion, with a 'B' originally appeared on Autoblog on Fri, 20 Feb 2009 10:58:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>auto bailoutauto bailout billauto bailout planauto bailout totalAutoBailoutAutoBailoutBillAutoBailoutPlanAutoBailoutTotalbailoutbailout billbailout planBailoutBillBailoutPlantotal bailoutTotalBailoutFri, 20 Feb 2009 10:58:00 EST<![CDATA[Followup: GM receives second gov't loan installment of $5.4 billion ]]>http://www.autoblog.com/2009/01/22/followup-gm-receives-second-govt-loan-installment-of-5-4-bill/http://www.autoblog.com/2009/01/22/followup-gm-receives-second-govt-loan-installment-of-5-4-bill/http://www.autoblog.com/2009/01/22/followup-gm-receives-second-govt-loan-installment-of-5-4-bill/#commentsFiled under: , ,

Cue the angels! General Motors reports that it has received the second installment of the $13.4 billion government loan that it was promised by former President Bush late last month. Sure, it may have arrived a few days late, leading GM's coffer-keepers to anxiously check their mailboxes every few minutes, but it showed up with time to spare before The General ran out of funds to pay the bills on March 31st.

For those keeping track, GM's total draw from the bridge loan so far rings the taxpayers' registers to the tune of $9.4 billion, leaving $4B still to come at a later date. In order to keep the money, GM must go back to Congress by February 17th with a full progress report detailing how it is fairing in reducing its current $28 billion in debt.

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

Followup: GM receives second gov't loan installment of $5.4 billion originally appeared on Autoblog on Thu, 22 Jan 2009 15:28:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>auto bailoutAutoBailoutbailoutbridge loanBridgeLoangm bailoutgm bridge loanGmBailoutGmBridgeLoanThu, 22 Jan 2009 15:28:00 EST<![CDATA[GM gets its $4 billion, Chrysler still waiting]]>http://www.autoblog.com/2009/01/02/gm-gets-its-4-billion-chrysler-still-waiting/http://www.autoblog.com/2009/01/02/gm-gets-its-4-billion-chrysler-still-waiting/http://www.autoblog.com/2009/01/02/gm-gets-its-4-billion-chrysler-still-waiting/#commentsFiled under: , , ,



On Monday, December 29, Chrysler and General Motors were supposed to get the first installments of its allotted funds from the $17.4 billion dollar bridge loans. On Wednesday, GM got it's $4 billion. Chrysler, on the other hand, is still "finalizing the details of our financial assistance." The U.S. Treasury - the body disbursing the funds - didn't have much to say beyond that, either, merely reiterating that it wants to get the deal done within a timeline that satisfies Chrylser's funding needs.

While we wonder what the holdup is, we have no reason to believe that Chrysler won't get its money. It is unlikely that anything has happened in the past three weeks to make the government go "On second thought..." We also wonder how Chrysler plans to meet the next deadline: by February 17, GM and Chrysler need to have submitted plans to demonstrate their long-term viability; on March 31, a putative "car czar" will decide whether those plans are actually worth anything. The idea that Chrysler can demonstrate sound health over the long-term in just 45 days is a head-scratcher, but hey, some folks didn't even think Chrysler would still be here, so that's got to count for something.

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

GM gets its $4 billion, Chrysler still waiting originally appeared on Autoblog on Fri, 02 Jan 2009 10:58:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>auto bailoutAutoBailoutbailoutbob nardelliBobNardellibridge loansBridgeLoanschryslerearningsfinancialsgmgovernmentrick wagonerRickWagonerFri, 02 Jan 2009 10:58:00 EST<![CDATA[Deadline passes without word on critical GMAC bond-exchange vote]]>http://www.autoblog.com/2008/12/29/deadline-passes-without-word-on-critical-gmac-bond-exchange-vote/http://www.autoblog.com/2008/12/29/deadline-passes-without-word-on-critical-gmac-bond-exchange-vote/http://www.autoblog.com/2008/12/29/deadline-passes-without-word-on-critical-gmac-bond-exchange-vote/#commentsFiled under: , ,

GMAC, General Motors' finance arm, was granted bank holding status, but there is still no word on whether the bond buyback was successful. The deadline for GMAC to have converted enough of its bonds - said to be 75 percent - into $28 billion in liquidity was on Friday, December 26, at 11:59 p.m. In return for bondholders converting their bonds to those of lesser value, they would receive a higher dividend.

Two weeks ago, GMAC said it found a slew of new bondholders, but didn't say whether the new participants would put it above the threshold. Now more than two days past the deadline, GMAC has only said "We have not yet issued final results but intend to in the near term." This kind of silence usually means that things didn't go as planned, but other plans are afoot. While it's not impossible, we'd be shocked if GM had fulfilled The Fed's requirements by the deadline and chose to remain quiet about it.

After all, success for GMAC means success for GM. But bankruptcy for GMAC - which could happen without access to TARP funds - could mean something very close to doom for a lot of dealers and for GM. Our guess is that GMAC and The Fed are trying to figure out the best way forward, because it is certain that the government doesn't want to see its $17.4 billion dollar investment go bust because GM lost on a side bet less than a month later.

[Source: New York Times]

Deadline passes without word on critical GMAC bond-exchange vote originally appeared on Autoblog on Mon, 29 Dec 2008 13:28:00 EST. Please see our terms for use of feeds.

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Each month, the American Pulse Survey seeks respondents' opinions regarding various political, pop culture and economic issues. Seeing that the auto bailout is a hot topic these days, it is unsurprising that much of the latest survey centered on the $17.4 billion in so-called bridge loans to the Detroit 3 automakers. So, who's to blame for the Motor City's downfall? Survey says: bad management (78.8 percent), the UAW (63.8 percent) and global economic uncertainty (57.7 percent); so say 4,117 Americans.

59.1 percent of respondents believe that the union should offer concessions to the automakers. Lastly, about half of Americans surveyed say that they are just as likely to consider a car from Detroit as they were before all this mess started.

Oh, just two more nuggets: The survey also notes that those surveyed find that "Grandma Got Run Over By a Reindeer" is the most annoying Christmas song, and 6.7 percent of respondents still believe in Santa. Amazingly, we're not kidding.

[Source: MSNBC]

Blame Game: Survey says who's at fault ? Management or union? originally appeared on Autoblog on Sat, 27 Dec 2008 10:58:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>17.4American Pulse SurveyAmericanPulseSurveyAPSauto bailoutAutoBailoutBail OutBailOutbridge loanbridge loansBridgeLoanBridgeLoansdetroit bailoutdetroit bridge loansDetroitBailoutDetroitBridgeLoansUAWUnionSat, 27 Dec 2008 10:58:00 EST<![CDATA[Fed grants GMAC bank holding status]]>http://www.autoblog.com/2008/12/24/the-fed-grants-gmac-given-bank-holding-status/http://www.autoblog.com/2008/12/24/the-fed-grants-gmac-given-bank-holding-status/http://www.autoblog.com/2008/12/24/the-fed-grants-gmac-given-bank-holding-status/#commentsFiled under: , ,

GMAC - and ergo General Motors - just got another Christmas present: the Federal Reserve has granted GMAC bank holding status. GMAC has billions of dollars of bonds coming due over the next 12 months, but doesn't have the liquidity to cover the obligations. As of last week, the financing company was in the midst of a bond buyback effort in order to raise enough money to qualify for bank holding status. Now that it's been granted, GMAC can tap the Troubled Asset Relief Fund intended for financial institutions, pay its debts and (probably) avoid bankruptcy.

It isn't clear, however, whether or not GMAC actually raised enough money through the bond buyback. The Fed said "emergency conditions" justified its actions, which makes us think the Fed just said "Here, take it." Looked at from a dealer perspective, it makes sense: if GMAC had gone under, one dealer estimated that it would have taken 30-40% of GM dealers down with it, and that could imperil GM itself. It wouldn't make much sense to let that happen when the government just loaned GM a bunch of money to stay in business.

And while GM is still a long, long way from getting the kind of money that any number of banks have, it's still beginning to add up. As a result of the new status, both GM and Cerberus are required to lower their stakes in GMAC. Cerberus has been told to lower its share to 33%, down from 51%; GM has said it will go below 10%. As for Cerberus' other headache, Chrysler Financial, it has said that if dealers don't stop making a run on its funds, it will cease financing for dealer inventories.

[Source: Yahoo!]

Fed grants GMAC bank holding status originally appeared on Autoblog on Wed, 24 Dec 2008 19:57:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>auto bailoutAutoBailoutcerberuschrysler financialChryslerFinancialearningsfinancialsfinancinggmgmactarpwall street bailoutWallStreetBailoutWed, 24 Dec 2008 19:57:00 EST<![CDATA[Chrysler won't suspend NASCAR program, will reduce funding]]>http://www.autoblog.com/2008/12/18/chrysler-wont-suspend-nascar-program-will-reduce-funding/http://www.autoblog.com/2008/12/18/chrysler-wont-suspend-nascar-program-will-reduce-funding/http://www.autoblog.com/2008/12/18/chrysler-wont-suspend-nascar-program-will-reduce-funding/#commentsFiled under: , , , , ,



A rubber bullet has been dodged: NASCAR can still count on sponsorship dollars and involvement provided by the Detroit 3. Chrysler has stated that it will reduce the funds that flow from its taps into NASCAR, but won't leave the sport. As far as marketing and advertising goes, the "stock cars" still pay. Mike Acavitti, who runs the motorsports program at Dodge, said "We have to get our expenses in line with our revenues," but also said that "We're not going to pull out. We are going to throttle back. NASCAR is not exempt from anything else that we do to market and promote vehicles."

Chrysler is cutting back 30% on its NASCAR spend, but will still honor its current contracts. Ford has said it's reducing its NASCAR fund by 20%, and GM says that it, too, will be doling out a smaller NASCAR allowance and letting track sponsorships lapse to go along with its getting out of the Yankees business. Even Toyota plans to spend less on NASCAR. No matter what, though, NASCAR isn't going anywhere -- after all, even if all of the car companies and all of the other sponsors left, the guys in the overalls could always race, you know... stock cars.

[source: Reuters via Speedzzter]

Chrysler won't suspend NASCAR program, will reduce funding originally appeared on Autoblog on Thu, 18 Dec 2008 19:39:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>auto bailoutAutoBailoutautomaker loansAutomakerLoanschryslerdodgeevernham motorsportsEvernhamMotorsportsfordgmmotorsportsnascarpenske racingPenskeRacingpetty enterprisesPettyEnterprisestoyotaThu, 18 Dec 2008 19:39:00 EST<![CDATA[If automakers get a bailout, should NASCAR die?]]>http://www.autoblog.com/2008/12/16/if-automakers-get-a-bailout-should-nascar-die/http://www.autoblog.com/2008/12/16/if-automakers-get-a-bailout-should-nascar-die/http://www.autoblog.com/2008/12/16/if-automakers-get-a-bailout-should-nascar-die/#commentsFiled under: , , , ,



A columnist over at Slate.com is recommending -- and not lightly, he wants you to know -- that with the domestic automakers enduring "Detroit's version of The Troubles," now would be a good time to "euthanize" NASCAR. He makes a long argument, but the crux of it is simple: if the domestics get a heap of money from the government, should that money really be used to sponsor a specialized race series that arguably doesn't have the national pull or the return it once did? His supporting arguments are sometimes disingenuous and occasionally slightly off-base, but the question is worth considering. If the public loans money to the automakers, who decides where that money is spent? Yet, if Ford, GM, and Chrysler were to do the same thing to NASCAR that Honda, Suzuki, Audi, and Subaru have been doing, well... that would leave NASCAR as a one-make series featuring, ta-da, Toyota. And wouldn't that be something to see? Thanks for the tip, Josh!

[Source: Slate]

If automakers get a bailout, should NASCAR die? originally appeared on Autoblog on Tue, 16 Dec 2008 18:28:00 EST. Please see our terms for use of feeds.

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55% of Americans are against a federal bailout of U.S. automakers. This, according to a Washington Post/ABC News poll of 1,003 randomly-selected adults nationwide that was conducted by phone last week between December 11 and 14 (we didn't get a call, did you?). 42% of those polled express support for the measure, which died in the Senate late last Thursday night. The poll results show that respondents place 75% of the blame for the current crisis facing Detroit on the shoulders of management, with 22% blaming the economy. On the question of whether automaker bankruptcy filings would be good, bad or make no difference in the economy, the majority (43%) feel that bankruptcy proceedings would have no effect. 34% feel it would be bad, and 17% of those polled believe that it would be a good thing for the broader economy.

In related news, an announcement on a new White House-backed bailout deal for GM and Chrysler using money from Hank Paulson's magic TARP slush fund could come tomorrow, according to Senator Carl Levin, the Michigan Democrat. Levin hopes/believes that whatever deal comes out of the current negotiations will be in line with the original, failed package brokered between President Bush and House Democrats. Republican Senator Bob Corker of Tennessee, whose Senate compromise deal fell apart when the UAW walked away from the table, is pressing the White House to impose "tougher" conditions on all involved parties as part of any potential agreement. However this pans out (last week's events should serve as a reminder that regardless of what's reported, a deal is not a "lock"), expect roughly half the population to be plenty ticked off once the smoke clears.

[Sources: The Washington Post, Reuters]

WaPo/ABC News: 55% of Americans against auto bailout; Levin says possible deal tomorrow originally appeared on Autoblog on Tue, 16 Dec 2008 14:29:00 EST. Please see our terms for use of feeds.

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GM doesn't just have its eye on auto bailout funds -- its GMAC division (of which it owns 49%) is looking for cash from among the $700 billion pledged in the Wall Street bailout. Through the end of next year, GMAC has roughly $12 billion in bonds maturing. But to have any chance at getting Wall Street funds to address those maturing bonds, GMAC wants to become a bank holding company. And to do that, it must raise $30 billion, with $2 billion of that tapped from new sources.

GMAC is looking for 75% of its bondholders to participate in a bond buyback, whereby a bondholder would return bonds worth $1,000 and get about $800 worth of bonds with a higher dividend in return. If it gets participation from 75% of it's bondholders, that will give it $28.5 billion, which it can add to $750 million GMAC says has been pledged by shareholders as part of the $2 billion requirement. That's not quite $30 billion, but closer is better than nothing.

The problem is that, for the moment, GMAC has only 25% participation. GMAC said it had a fresh round of bondholders willing to swap, but didn't make it clear whether that would get it to 75%. If it doesn't get the financing to become a bank holding company, GMAC would likely need to declare bankruptcy. And if that happens? Well, GMAC provides inventory financing for 80% of GM vehicles worldwide. Without that source of financing, said Martin NeSmith,"There's so many dealers on the edge, if GMAC goes out of business 30 to 40 percent of dealers won't be able to get financing from anywhere else." And that spells even more trouble -- and bankruptcies -- for everyone.

[Source: Automotive News - Sub. Req.]

GMAC rushes to conclude bond buyback and avoid bankruptcy originally appeared on Autoblog on Tue, 16 Dec 2008 09:00:00 EST. Please see our terms for use of feeds.

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Click above to start laughing at our auto bailout speech bubble comics

During the past few weeks during which the auto industry has struggled to secure government loans to stave off bankruptcy, we've covered the proceedings in an unusual way. We found this one picture of the Detroit 3 CEOs during their testimony to Congress that encapsulated what we felt was going on. GM CEO Rick Wagoner and Chrysler CEO Bob Nardelli are locked in a stare, just as their companies are locked together as the two most desperately in need of gov't aid. Ford CEO Alan Mulally sits off to the right looking the other way, just as Ford stands apart from its domestic competitors as the only with a shot of surviving without federal funds.

Though the events of the day are serious matters, we had our fun and kept things light by using this image over and over again, each time adding different speech bubbles with what we thought each CEO was thinking. They were fun to create and we didn't expect it to turn into a "thing", but we've gotten so many requests to compile all of these speech bubble comics in one place that today we've decided to oblige. Click below to start from the beginning and there are a few bonus comics at the end from other posts related to the auto industry bailout.


Best of the Autoblog Speech Bubble Comics originally appeared on Autoblog on Fri, 12 Dec 2008 12:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>auto bailoutAutoBailoutautoblog speech bubbleAutoblogSpeechBubblebailoutfeaturedspeech bubble comicsSpeechBubbleComicsFri, 12 Dec 2008 12:00:00 EST<![CDATA[DOW opens down sharply, President reconsiders tapping TARP funds]]>http://www.autoblog.com/2008/12/12/dow-opens-down-sharply-president-considers-tapping-tarp-funds/http://www.autoblog.com/2008/12/12/dow-opens-down-sharply-president-considers-tapping-tarp-funds/http://www.autoblog.com/2008/12/12/dow-opens-down-sharply-president-considers-tapping-tarp-funds/#commentsFiled under: ,



9:30 AM EST has come and gone and the Dow Jones Industrial Average has officially begun its trading day. As expected, the index dropped sharply after the opening bell, which was rung today by singer/actress Mandy Moore. Ms. Moore watched as before sound waves from the bell hit the other side of the room, the Dow had fallen from 8,565 points to 8,348, or about 217 points. At the moment it's back up above 8,400 points, but who knows where we'll go from there.

We've been watching cable news all morning, and it was revealed about 20 minutes before the Dow opened today that the White House was reconsidering its stance against tapping the Troubled Asset Relief Fund for troubled U.S. automakers. While we haven't heard anything official from the administration yet, pundits say it does have the power to redistribute some of the $700 billion earmarked for financial institutions to aid automakers. Before the Senate shot down an Auto Rescue/Bailout Bill last night, the White House had refused to consider tapping TARP to save General Motors and Chrysler from imminent bankruptcy. Now it seems all three automakers could file for Chapter 11 before Bush leaves office in January unless the administration acts quickly.

UPDATE: Of the $350 billion available in the first round of TARP fund distribution, $335 billion has already been handed out to financial institutions. That conveniently leaves about $15 billion, which is almost exactly the amount General Motors and Chrysler require to stave off immediate bankruptcy. Still no official word from the White House, other than that it's reconsidering the use of TARP money to aid automakers after the Senate's failure to pass a rescue/bailout bill last night.

[Source: AOL Money and Finance, MSNBC]

DOW opens down sharply, President reconsiders tapping TARP funds originally appeared on Autoblog on Fri, 12 Dec 2008 09:54:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>administrationauto bailoutAutoBailoutbailoutDJIAdow jonesdow jones industrial averageDowJonesDowJonesIndustrialAverageTARPwhite houseWhiteHouseFri, 12 Dec 2008 09:54:00 EST<![CDATA[Workers wages the straw that broke the automakers' backs]]>http://www.autoblog.com/2008/12/12/workers-wages-the-straw-that-broke-the-automakers-backs/http://www.autoblog.com/2008/12/12/workers-wages-the-straw-that-broke-the-automakers-backs/http://www.autoblog.com/2008/12/12/workers-wages-the-straw-that-broke-the-automakers-backs/#commentsFiled under: , , ,



After such a drawn out, difficult process to get an Auto Rescue/Bailout Bill through Congress, there was one issue in particular that led to its defeat at the hands of Senate Republicans. Word has it that hope was in the air around 7PM EST yesterday evening that a deal could be reached among Republicans in the Senate, Congressional Democrats, auto industry representatives and the UAW. Some time later after the industry reps went home, the UAW was left in the room with Senate Republicans negotiating over one final issue that stood in the way of Republican support for the compromise bill. That issue was wage parity with non-union assembly plants run by foreign automakers in the U.S., also known as "transplants".

The UAW was willing to consider lowering its wages across the board to meet those of non-union plants, but wanted to delay any cuts until after its current contracts with the Detroit 3 run out in 2011. Plus, it's not exactly clear what level of pay would be targeted, as foreign run plants pay a wide range of wages to their workers, even among plants owned by the same foreign automaker. Nevertheless, without the UAW conceding to cut wages immediately, Senate Republicans refused to support the bill and it failed late Thursday night during a procedural vote.

The markets are about to open on Wall St., after which we'll have a clearer picture of the repercussions of last night's Senate vote. The only avenue left for immediate federal assistance is for the White House to allocate funds from TARP, which it may be more inclined to do after the bell rings to open the New York Stock Exchange this morning.

[Source: Automotive News, sub. req'd, Photo by Bill Pugliano/Getty]

Workers wages the straw that broke the automakers' backs originally appeared on Autoblog on Fri, 12 Dec 2008 09:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>auto bailoutAutoBailoutbailoutUAW wagesUawWagesFri, 12 Dec 2008 09:30:00 EST<![CDATA[Pay raise for federal judges and tax shelters snuck in Auto Rescue/Bailout bill]]>http://www.autoblog.com/2008/12/11/pay-raise-for-federal-judges-and-tax-shelters-snuck-in-auto-resc/http://www.autoblog.com/2008/12/11/pay-raise-for-federal-judges-and-tax-shelters-snuck-in-auto-resc/http://www.autoblog.com/2008/12/11/pay-raise-for-federal-judges-and-tax-shelters-snuck-in-auto-resc/#commentsFiled under:

Let's say you're a Congressman and your constituents are begging for a bronze statue of Johnny Cash in the center of town. Fortunately, there's an important bill being voted on this week, so you just slide a federal funds provision for "urban improvement" in there and vote Yes for the larger matter along with your buddies. It's called pork and the Auto Rescue/Bailout Bill approved by the House last night contains a couple bites of it.

In addition to approving $14 billion in government loans for the Detroit 3, the bill also provides a cost of living adjustment (COTA) for federal district judges, otherwise known as a good old raise. They currently make $169,300/year, which some fear is too little for the important function they serve. Normally these judges earn exactly what those in Congress make, but while politicians in the House and Senate automatically get a COTA each year, they must vote to give the same to judges. The Senate has already approved this year's COTA for judges, but the House hasn't. To remedy this, Senate Majority Leader Harry Reid (D-NV) slipped the provision into the Auto Rescue/Bailout Bill. This also has the added benefit of hiding the raise behind the larger issue of aid for U.S. automakers, as the general populace might not look kindly on any government employee getting more money in the midst of a recession.

The other piece of pork in the bill involves a big tax shelter for corporations that allows them to avoid paying taxes. We had a hard time following exactly how this one works, but Zac over at BloggingStocks is really miffed about it, so it must be bad.

[Source: Wall Street Journal, BloggingStocks]

Pay raise for federal judges and tax shelters snuck in Auto Rescue/Bailout bill originally appeared on Autoblog on Thu, 11 Dec 2008 14:29:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>auto bailoutauto rescueAutoBailoutautomaker rescueAutomakerRescueAutoRescuejudges raiseJudgesRaiseporkraise for judgesRaiseForJudgesThu, 11 Dec 2008 14:29:00 EST<![CDATA[House passes Auto Rescue/Bailout Bill, still faces heavy Senate opposition]]>http://www.autoblog.com/2008/12/10/house-passes-auto-rescue-bailout-bill-still-faces-heavy-senate/http://www.autoblog.com/2008/12/10/house-passes-auto-rescue-bailout-bill-still-faces-heavy-senate/http://www.autoblog.com/2008/12/10/house-passes-auto-rescue-bailout-bill-still-faces-heavy-senate/#commentsFiled under: , , ,



The U.S. House of Representatives voted late Wednesday to pass the Auto Rescue/Bailout Bill by a vote of 237 to 170. The contents of the bill came from concessions made by Congressional Democrats to White House demand, which include $14 billion in government loans, $1 billion less than was previously discussed, and the creation of a "Car Czar" appointed by the president to oversee the automakers' progress. It is widely recognized that the bill is a stop-gap measure meant to float General Motors and Chrysler through the end of March. This would give them time to renegotiate with its creditors, the UAW and other companies. If all goes well, the status of GM and Chrysler will be reviewed around March 31st to determine if further federal assistance is required, which it likely would be unless the economy magically recovers and people start buying new vehicles again in larger numbers.

Continue reading House passes Auto Rescue/Bailout Bill, still faces heavy Senate opposition

House passes Auto Rescue/Bailout Bill, still faces heavy Senate opposition originally appeared on Autoblog on Wed, 10 Dec 2008 22:42:00 EST. Please see our terms for use of feeds.

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If there's anyone out there who's qualified to opine on what it takes to turn around a struggling automaker, it's Lee Iacocca. Those old enough to remember life in the late '70s can recall Iacocca's first stint at the head of Chrysler, way before the automaker was ever purchased by Daimler and its subsequent sale to Cerberus. The situation in which the beleaguered automakers currently find themselves bears a striking similarity to that of Chrysler's in 1979, except that Chrysler was the only one of the Big 3 that needed Federal help back then and the total loan offered to Chrysler was just $1.5 billion.

Today Lee Iacocaa has finally offered his take on what should happen to Detroit's current execs. "Having been there, I do not agree with the sentiment now coming out of Congress that the management should be changed as a condition of granting loans to the Detroit automakers. You don't change coaches in the middle of a game, especially when things are so volatile." He adds, "They're by far the best shot we have for success."

To many, Iacocca is the man most responsible for righting the ship at Chrysler back in the early '80s, creating the venerable K-car and fast-tracking the first minivan, so his opinions should carry a bit more weight than others. But is he right?

[Source: AP via Google]

Lee Iacocca in favor of keeping Detroit 3 CEOs originally appeared on Autoblog on Tue, 09 Dec 2008 15:00:00 EST. Please see our terms for use of feeds.

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The choices are: spend $15 billion in bridge loans now to keep the Detroit Two (GM and Chrysler, since Ford can apparently hold its own) from going bankrupt, or spend $70 billion over the next two years to pay for the fallout from the Detroit Two going bankrupt. Those are the numbers according to the Anderson Economic Group and BKK, which get to their $70 million number based on 1.8 million job losses and evaporating federal and state tax revenue. And that number still doesn't include things like the jolts to credit markets, consumer confidence and manufacturing and supplier bases, among other nuclear scenarios. The question now is: how are the two (or three) automakers going to divvy up the $15 billion and just how many strings will Congress attach?

[Source: Detroit News]

STUDY: Detroit bankruptcy would cost four times more than bailout originally appeared on Autoblog on Mon, 08 Dec 2008 17:29:00 EST. Please see our terms for use of feeds.

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