Inching Toward a Bailout Deal for GM and Chrysler
As talks continue over whether the government should rescue the auto industry, disputes persist between congressional Democrats and the White House—but Washington is closer to granting the "Big Three" a bailout than it has been in weeks.
Under the Democrats' plan, the automakers would receive $15 billion in loans. The first loans would go to General Motors and Chrysler, which said last week that they'll need about that amount to survive into 2009. Ford has said it doesn't require short-term cash assistance.
According to the plan, President Bush would appoint a "car czar" to disburse the loans and oversee the companies' restructuring. The appointee, whom House Speaker Nancy Pelosi said this morning she hoped President-elect Barack Obama and Bush could agree upon so the new president wouldn't have to make a new appointment, could even force the corporations into bankruptcy if they aren't doing enough.
Given the extent of federal oversight implied, the bill comes close to nationalization. But against the fears of a deepening recession, there seems to be relatively little protest.
When the bill reached the White House last night, however, there were several objections to the proposal. One aspect the administration was wary of was the requirement that the companies tell Washington about any transaction over $25 million.
Still, Deputy White House Press Secretary Tony Fratto told the Associated Press today, "We made progress and hope to continue making progress." A vote on the bill could come as early as Wednesday.
The loans add up to far less than the $34 billion the automakers originally sought. But the fact that any loans are likely at all at this point, after the debacle of the congressional hearings, seems surprising. The change of heart stems partly from last week's news that a record 533,000 jobs were lost in November.
- Read more on why Congress might bail out the Big Three after all
Reader Comments
General Motors bail out
Once the nation can afford it, carry on, but with caution for the future. Surveillance would become necessary. This would save so many jobs as well as investors money. Great for the general ecvonomy as well as for the global impact.
Effects on consumers
Another aspect that should be discussions is what will happen to the GM, Ford and Chrysler vehicles on the road if their respective manufacturers’ close shops. While the supply of parts is secure for at least ten years there is no doubt that the GM which you bought for $30k and is now worth $20k will become worth $10k if GM closes it's doors. Do we want that to happen?
Furthermore, consumer's remedies will be violated to the extent that all claims against these manufacturers will become worthless. I deal a lot with the automotive industry as plaintiff's counsel in auto dealer fraud and auto defects (lemon law) cases and I know for a fact a lot of my clients will loose significant sums if there is no bailout. A lot of cases where the vehicles are defective, where vehicles were involved in catastrophic accidents due to their defects and/or where the drivers were seriously injured – all these cases would become mute because the manufacturers would not be around to answer for their actions. We are already noticing a trend in defense tactics from their defense counsel whereby they are creating unnecessary delays in litigation in the hopes of the manufacturer going bankrupt. If this is about accountability then we need to set things right but making the manufacturers become accountable not by closing doors and taking off with what’s left but by correcting their mistakes and cleaning up their act. Moreover, GM Ford and Chrysler are such great symbols of America that letting them fail would be in part a failure by us all.
Forign Cars Suck
Thats Why Big 3 are awsom
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