Battle over Big Three bailout looms in lame-duck C

[Nikkol]

Battle over Big Three bailout looms in lame-duck Congress

I've read the story and I'm not certain that I think that we should be bailing out the auto companies.....what are your views?

[stillfocused]

I don't either. My son asked a good question..whose going to bail us out ?

[ybrown]

The Treasury (with our money) has bailed out several companies over the last 40 years and almost every time the government has made a good profit. Whether we the people share in that profit in some form is another story.

I would hope if the bailout happens, that some kind of stock warrant is a condition because it would almost assure that the Treasury makes some sort of profit. This provision was missing in the S&L deal and we paid dearly for years.

What's interesting is that the foreign manufacturers that manufacture cars in the U.S. -- Honda, Toyota, and Nissan -- are not in the same boat as the American car makers, and actually Honda is hiring and opening new plants here. Sure they're struggling some because of the world-wide recession but on the whole they're booming.

American car makers are not competitive and if they want a fresh start with an infusion of cash from us, we should require that these companies get a new start with new management because they are the reason their people have no foresight or vision and their companies are on the verge of collapse.

I know that some of the bailout money is supposed to go to producing more smart and green cars, but how could the management not know that this was the future and trend several years ago? Basically, the car companies need money to survive their many years of bad business decisions.

If these companies went under, other companies will rise to take their place. Millions of jobs would be initially lost but millions more would be created.

To do a bailout and still allow the Big 3 to maintain the status quo -- same management, continued production of the same cars that nobody wants -- is the definition of insanity. If we allow that to happen it will be a matter of time before they needed another bailout or they go under. A blank check with no caveats would be just enough rope for them to hang themselves and us.

[Nikkol]

The problem is that when the foreign companies were making more efficient cars giving higher mileage/gallon and hybrids, etc. The American makers were making SUV's and gas guzzlers while prices were going up..... and every foreign car I've owned uses 87 gas (I think that's the lowest number...can't remember). Some of your nicer American Cars are going to take 93 or above.

Keeping that in mind, what exactly would the bailout do? Give them more money based on POOR decisions. Granted, I understand that a LOT of jobs are at stake.... but after 2010, they'd still be at stake..... all it does is buy ppl some time to maybe find other employment.

I do think I read something in reference to maybe a merger between the BIG 3.... I'm not sure.

[kanyon]

I don't know if it was here but I read that while the big three are going down, the others who are building in this country are growing and hiring.

Someone once said, 'If we keep on doing what we always do, we'll keep on getting what we always get'

Chapter eleven doesn't mean that everyone loses their jobs..it just means that the companies have an opportunity to reoganise, renegotiate retool and retrain.

Perhaps its time to let the market determine the outcome.

[kitty]

Personally....

I'm not sure what exactly the bailout for them will do? I agree bad decision are bad decisions...

But I also don't think I am for the bail out of Wall street either...especially when they took the money and used it to pay bonues for ceo of companies!

Doesn't the whole bad idea go there too....


I know amny people wanted banks to be bailed out to free up crdit...but so far that hadn't worked... The banks got the money and are still sitting on it...

So someone just explain this to me... Why bail out Wall street and not the car companies? What's the difference?

Kitty

[ybrown]

Nov 18, 2008 12:05:42 GMT -5 kitty said:

Personally....

I'm not sure what exactly the bailout for them will do? I agree bad decision are bad decisions...

But I also don't think I am for the bail out of Wall street either...especially when they took the money and used it to pay bonues for ceo of companies!

Doesn't the whole bad idea go there too....


I know amny people wanted banks to be bailed out to free up crdit...but so far that hadn't worked... The banks got the money and are still sitting on it...

The Feds and members of Congress are looking at putting a requirement that forces banks and those that take part in the second half of the bailout, to make more loans to the people, otherwise they will not get funding.

So someone just explain this to me... Why bail out Wall street and not the car companies? What's the difference?

Almost every single person and business in this country relies on Wall Street and most companies (large and small) use credit to finance day-to-day operations. Companies rely on credit to pay their bills, purchase inventory, meet payroll and to re-invest to grow/keep their businesses competitive.

With a weak Wall Street people can’t get mortgages, auto and student loans, credit cards, or other lines of credit. Even if you don’t own a home, you’re renting and your landlord has a mortgage. The stores you shop in require credit, the gas stations you get gas from, the movie theater you go to, the private companies that provide government services you use (governments take forever to pay their vendors so these companies rely on credit to survive).

Throughout the day it’s hard to come in contact with a person or company that does not rely on the credit market and the backing of Wall Street.

Some companies do have good cash flow and carry a low amount of debt, but even then it’s cheaper for them to use short term credit than to convert company profit into cold hard cash. That would cut into the bottom-line and affect the balance sheet.

The Wall Street bailout affects each and every one of us, the auto bailout would affect a smaller scope of people, limited mostly to the companies themselves, their employees, businesses that support/supply auto industry, a lot of 401Ks and other retirement investments, and in some way the people that own cars manufactured and backed (with warranties and replacement parts) by the Big 3.

But now companies from other industries and even cities are coming forth wanting their "fair share" of the bailout. Philly, Phoneix and Atlanta are real in trouble.

[Nikkol]

(CNN) -- Some lawmakers lashed out at the CEOs of the Big Three auto companies Wednesday for flying private jets to Washington to request taxpayer bailout money.


Chrysler CEO Robert Nardelli, left, and Ford CEO Alan Mulally testify on Capitol Hill on Wednesday.

"There is a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hand, saying that they're going to be trimming down and streamlining their businesses," Rep. Gary Ackerman, D-New York, told the chief executive officers of Ford, Chrysler and General Motors at a hearing of the House Financial Services Committee.

"It's almost like seeing a guy show up at the soup kitchen in high hat and tuxedo. It kind of makes you a little bit suspicious."

He added, "couldn't you all have downgraded to first class or jet-pooled or something to get here? It would have at least sent a message that you do get it."

The executives -- Alan Mulally of Ford, Robert Nardelli of Chrysler and Richard Wagoner of GM -- were seeking support for a $25 billion loan package. Later Wednesday, Senate Majority Leader Harry Reid reversed plans to hold a test vote on the measure.

An aide told CNN that Reid decided to cancel the test vote when it became clear the measure would fall well short of the 60 votes needed. Reid did, however, make a procedural move that could allow a vote on a compromise, which several senators from auto-producing states were feverishly trying to craft.

At Wednesday's hearing, Rep. Brad Sherman, D-California, pressed the private-jet issue, asking the three CEOs to "raise their hand if they flew here commercial."

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"Let the record show, no hands went up," Sherman said. "Second, I'm going to ask you to raise your hand if you are planning to sell your jet in place now and fly back commercial. Let the record show, no hands went up."

The executives did not specifically respond to those remarks. In their testimony, they said they are streamlining business operations in general. Watch Nardelli ask for help »

When contacted by CNN, the three auto companies defended the CEOs' travel as standard procedure.

Like many other major corporations, all three have policies requiring their CEOs to travel in private jets for safety reasons.

"Making a big to-do about this when issues vital to the jobs of millions of Americans are being discussed in Washington is diverting attention away from a critical debate that will determine the future health of the auto industry and the American economy," GM spokesman Tom Wilkinson said in a statement.

Chrysler spokeswoman Lori McTavish said in a statement, "while always being mindful of company costs, all business travel requires the highest standard of safety for all employees."

Ford spokeswoman Kelli Felker pointed to the company's travel policy and did not provide a statement elaborating.


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But those statements did little to mollify the critics.

"If it is simply the company's money at stake, then only the shareholders can be upset or feel as it might be excessive," said Thomas Schatz, president of the watchdog group Citizens Against Government Waste.

But in this case, he said, "it's outrageous."

"They're coming to Washington to beg the taxpayers to help them. It's unseemly to be running around on a $20,000 flight versus a $500 round trip," Schatz added. iReport.com: Should the Big Three be bailed out?

The companies did not disclose how much the flights cost.

Analysts contacted by CNN noted that the prices vary with the size of the plane and the crew, and whether the aircraft is leased or owned by the company.


Analyst Richard Aboulafia of the Teal Group said that $20,000 is a legitimate ballpark figure for a round trip corporate jet flight between Detroit, Michigan, and Washington.

When asked whether they plan to change their travel policies as part of the restructuring needed to shore up their finances, none of the companies answered directly. But they said they have cut back on travel in general as revenues have fallen.


Big Three auto CEOs flew private jets to ask for taxpayer money

[kitty]

Thanks for Posting That Nikkol.....

I think I am about sick of Upper Management! LOL

Kitty

[Nikkol]

Update! It didn't go through. I think that was a good decision..


Senate Puts the Brakes on Auto Bailout

By KEN THOMAS and JULIE HIRSCHFELD DAVIS

Senate Majority Leader Harry Reid said he was "terribly disappointed" about the demise of the deal to rescue Detroit's Big Three.

WASHINGTON — Their efforts in Congress squashed, U.S. automakers are depending upon a reluctant White House to quickly provide a multibillion lifeline to help them avoid imminent collapse.

General Motors Corp. and Chrysler LLC, which have said they could run out of cash within weeks, have few options left after the dramatic defeat in the Senate of a $14 billion bailout for the domestic auto industry.

Its demise late Thursday prompted immediate calls from lawmakers in both parties for the Bush administration to tap into the $700 billion Wall Street bailout to rescue the beleaguered auto industry. The bill failed after talks broke down over the refusal of the United Auto Workers union to meet Republican demands for aggressive wage reductions.

The Senate rejected the bailout 52-35 on a procedural vote — well short of the 60 required — after the talks fell apart.

"I dread looking at Wall Street," said Senate Majority Leader Harry Reid in anticipation of Friday's stock market reaction. "It's not going to be a pleasant sight."

Stock markets in Asia and Europe dropped sharply on Friday after getting word of the bailout's failure.

The Bush administration has repeatedly said the Wall Street bailout fund should not be used for emergency aid to the automakers because it was designed to restore stability to the financial sector. Following the vote, the White House said it was studying its options.

"Plan B is the president," said Sen. Carl Levin, D-Mich. House Speaker Nancy Pelosi said action by President George W. Bush was the "only viable option."

General Motors and Chrysler are in the most immediate danger while Ford Motor Co. has said it does not need federal help now, but could face collateral damage if one of its domestic rivals fell. With the economy in recession, the auto industry has struggled under the weight of lackluster sales and choked credit markets.

Detroit's carmakers employ nearly a quarter-million workers, and more than 730,000 others produce materials and parts for cars. If one of the automakers declared bankruptcy, some estimate as many as 3 million U.S. jobs could be lost next year.

The White House said it was disappointed by the vote and the legislation "presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable."

Many congressional Republicans and some economists said the companies would be best to pursue a prearranged bankruptcy that would allow them to restructure quickly. But most Democrats and the carmakers rejected that, arguing it would quickly lead to liquidation because consumers would never buy cars from a bankrupt auto company.

As it lobbied unsuccessfully on Thursday, White House officials said the weak economy couldn't afford the collapse of the auto industry. President-elect Barack Obama said an industry shutdown would have a "devastating ripple effect" on the already battered economy.

GM said in a statement is was "deeply disappointed" that the bipartisan agreement faltered. "We will assess all of our options to continue our restructuring and to obtain the means to weather the current economic crisis," the company said.

Chrysler said it was also disappointed and would "continue to pursue a workable solution to help ensure the future viability of the company."

The companies efforts for funding failed after a marathon set of negotiations at the Capitol among labor, the auto industry and lawmakers who bargained into the night to salvage the auto bailout at a time of soaring job losses and widespread economic turmoil.

The group came close to agreement, but it stalled over the UAW's refusal to agree to wage cuts before their current contract expires in 2011. Republicans, in turn, balked at giving the automakers federal aid.

The UAW did not immediately react to the failure of the Senate proposal.

Aid to the automakers gained urgency last week when the government reported the economy had lost more than a half-million jobs in November, the most in any month for more than 30 years.

The stunning disintegration of the auto bailout proposal was eerily reminiscent of the defeat of the $700 billion Wall Street bailout in the House, which sent the Dow tumbling and lawmakers back to the drawing board to draft a new agreement to rescue financial institutions and halt a broader economic meltdown. That measure ultimately passed and was signed by Bush.

It wasn't immediately clear, however, how the auto aid measure might be resurrected in a bailout-fatigued, postelection Congress, with Bush's influence at a low ebb.

Earlier in the week, the House approved a bill that would have created a Bush-appointed overseer to dole out the money. At the same time, carmakers would be compelled to return the aid if the "car czar" decided the carmakers hadn't done enough to restructure by spring.

Some Senate Democrats joined Republicans in turning against the House-passed bill, despite increasingly urgent expressions of support from the White House and Obama for quick action to spare the economy the added pain of a potential automaker collapse.

Copyright Associated Press / NBC Philadelphia

[krazeeboi]

Don't make it a bailout; make it a loan that the government gets back with a profit as it was stated earlier. And it does need to come with conditions, probably including replacing all of upper management.

[Nikkol]

Dec 12, 2008 9:05:05 GMT -5 krazeeboi said:

Don't make it a bailout; make it a loan that the government gets back with a profit as it was stated earlier. And it does need to come with conditions, probably including replacing all of upper management.

I think the issue was that the car companies have unions which always make things more difficult. (think about all the strikes and almost strikes we have had in Philly based on the Union).

But they wanted to make pay cuts esp. since the ppl are making $3-4 more per hour than other car companies (US employees) which wasn't going to "fly". However, if that's what it would take to keep you with a job and not going bankrupt, I think they should've taken the deal.....

They won't be able to pay back the loan because the fact that they've had this issue and ppl have seen it alone is gonna stop ppl from buying those cars.... I've been thinking now about how I need a new(used) car since I have an Amercian car now.