It sounds like the $25 billion already authorized, will reach the big 3 sooner rather than next year.

 

Bailout compromise blocked, but hope remains

Pelosi: 'Until they show us a plan, we can't show them the money'


Harry Stoffer
Automotive News
November 20, 2008 - 12:48 pm ET
UPDATED: 11/20/08 4:30 p.m. EST



WASHINGTON -- Democratic leaders of Congress today blocked action on legislation that would provide $25 billion in emergency federal loans to the Detroit 3.

Instead, the leaders directed General Motors, Ford Motor Co. and Chrysler LLC to submit plans showing how they would use the aid. They scheduled hearings on the plans for the week of Dec. 2, and said Congress would return Dec. 8 to consider aid measures.




The announcement upstaged moves by a bipartisan group of senators to get action this week on a compromise that would redirect $25 billion in funds already approved to help automakers build more fuel-efficient vehicles. Instead, they would let the Detroit 3 use the money to bridge their cash crises, but with extensive conditions.

Sens. Carl Levin and Debbie Stabenow, both Michigan Democrats, scheduled an afternoon news conference with Republicans from automaking states to discuss the compromise.

But before they arrived at a Capitol studio, House Speaker Nancy Pelosi, D-Calif., Senate Majority Leader Harry Reid, D-Nev., and seven other Democratic leaders entered the room and announced their decision to demand viability plans from the Detroit 3 and hold more hearings.

"It's their agreement," Reid said of the compromise's supporters.

Added House Speaker Nancy Pelosi, D-Calif.: "Until they show us a plan, we can't show them the money."

Pleased by bipartisan effort

But during their news conference, Levin and other lawmakers said they were pleased with the compromise and hoped it could form the basis of a deal in December. They said they were disappointed by the decision by the Democratic leaders to postpone action for at least two weeks.

"There's risks in this delay" for the teetering companies, Levin said.

Under his bill, the Commerce Department would consider the Detroit 3 viability plans. Under the leaders' plan, the review would be Congress' job.

"That's taking on a huge responsibility," Levin said.

Stabenow said she is encouraged that the leaders acknowledged the critical importance of the auto industry and "are not shutting the door" to aid.

Sen. George Voinovich, R-Ohio, said millions of Americans who depend on the industry are worried about their livelihoods. A vote on the compromise "would have been a wonderful Thanksgiving present" for them, he said.

Voinovich complained that the Democratic leaders have established no criteria for the plans automakers are to submit to Congress.

Automakers react

In a statement, Ford Motor Co. said it would forward a plan to lawmakers.

"Ford welcomes the opportunity to provide our plan to Congress," the statement said. "We have a great plan that will continue Ford's transformation into a lean, profitable company that delivers the safe, fuel-efficient, high-quality new products that our customers want and value."

In a separate statement, GM said it would "deliver a plan to Congress that shows them a viable General Motors. We agree completely that there must be accountability to U.S. taxpayers for government support that enables automakers to continue their restructuring and to ensure a stronger, more competitive auto industry.

"We will continue to work vigorously with the Congress and the administration during the next few weeks to address their concerns and to arrive at a solution that provides immediate aid to the auto industry," GM said.

Congress vs. White House

Democratic leaders support carving out $25 billion in loans to the Detroit 3 from the $700 billion federal bailout fund for financial institutions. President George W. Bush and GOP lawmakers have rejected that approach.

Reid said the CEOs of the Detroit 3, who testified before House and Senate committees this week, did not convince Congress that their companies could be made viable with more aid. He said he would look for accountability in the companies' plans.

Pelosi also expressed doubt that federal aid would make the Detroit 3 viable, But she rejected suggestions that the companies should file for bankruptcy protection.

 

Scratch that:

http://www.nytimes.com/2008/11/21/bu...21auto.html?hp

Emphasis mine.

The lesson - don't come into class late and with your homework done in a half-assed manner.

 

not too long ago it was said:
was this the same plan presented to congress just recently?

 

There may have been a "plan" but if that plan did not include a detailed and massive push to small, "green" cars like Congress wants to hear, that could be a sticking point....

 

Of course there is a push towards small, green cars.

A secondary outcome of this unknown law our government enacted called CAFE.
In the sureal world of Washington D.C., as far as I can tell, no one there is even aware of it.

 

They have a plan...inside of GM it's called the "we've got to cover our retiree's pension and health care benefits even though we can no longer afford them but we don't want anybody to know" plan...outside of GM/in front of Congress it's called the "give us money because we are too big to allow to fail" plan.

 

They're probably reluctant to present their detailed plan because it probably reveals their future product plan. And we know how protective they are of those.
But desparate times take desparate measures. If getting the money means revealing future product plans, then so be it.

 

In recent years, it seems like GM has been more than willing to reveal their product plans, probably because they're trying to demonstrate to investors that there's some light at end of the tunnel.

After telling everyone about the Camaro three years ago, they're now going to clam up in front of Congress? The issue might be that the product plan is bleak (that is, nothing to show for the money).

 

It could also be, that to reveal a lot about such plans could invite a 'self-fulfilling prophecy' in which their competitors get an early, one-way tip-off about the plans, along with an advantage in reacting to them, hence furthering the demise of GM. That's not so good... and could hurt their chances of long-term success despite wowing Congress and getting a bridge over their short-term problems.

 

More than likely the numbers are simply too big.

GM could eat up 25 billion in a few months by themselves. How much would it cost to get the pensions under control? How much would it cost to kill a brand or four?

Writing a check that big solely so that they can fire 30% of the workforce and cut the rests pay cant sound good no matter how you say it.

 

Absolutely. GM needs $100 billion by itself. I dont think anyone is buying the idea that spreading $25 billion between the Detroit 3 is going to accomplish anything.

 

I actually watched about an hour or two of that hearing on C-Span.

IMO, Wagoner put on a disappointing show, maybe cause I was rooting for GM and had high hopes. I just wasn't exactly convinced that 2010 GM would be okay, at the level of 15-16 million units. I want to believe they will be..

Mulally seemd to have a good time tooting how relatively well Ford was doing, and how great their products are.. although he did stumble hard when they bluntly asked, "so why do you need the money?" lol


Nardelli put a good show, being a bit humble in his tone, and attempting to give some vague reassurances Chryslers.


But none of them were convicing to anyone, that they aren't coming back for more money of this $25 billion. Heh, Wagoner got a bit hot and fired back something like 'well if you can guarantee the economy gets better again, then I can guarantee we won't be back'. That ended it. heh.


I like how Gettelfinger's best defense against a Chapter 11, funded by the gov, was simply it would take too much time and be chaotic with red tape.. which I guess, in a way is valid.. Obviuosly the UAW doesn't want to go there, because everyone knows what would happen.


Oh and that professor, Morici, was hilarious. "the mouse the roared" lol. He cut straight to cut on his views that 25 billion now would just delay the inevitable, and major restructing has to happen to bring costs back in the line with domestic transplant labor... Especially since the focus is on small cars with thin margins. Its just something those 3 CEO's did not want to admit. I would have respected his view a bit more, if he didn't sneak in his rant about fuel efficient cars for the masses.. Everyone in the room stopped and laughed when he later slipped that he drove a Ford Truck, while he's advocating the manufactures and the buyers to move to small fuel efficient vehicles.


But it seemed to be a common theme.. At least the senators there kept alluding that they wanted some sort of string to get the big 3 to control what cars they will make - aka small and fuel efficient. Makes me wonder what kind of butchering the Gov would do to the product lines if they had the power.

 

If Rick were to claim that GM honestly projects NA industry sales of 15-16M units in 2010, then I think he'd be committing perjury. I seriously doubt that any industry insider would claim that we'll return to the good ol' days prior to the 2012-2013 timeframe.

The data I've seen from industry consultants paints a bleak picture for Ford and GM in the near-term future. Think that 2008 has been bad? Put that on repeat for five years and see how bad things can really get.

 

I disagree. GM doesn't "need" nor has it asked for $100B. The mistake a lot, including you, are making is to assume GM's situation will remain static. However I'm sure they will react dynamically, cutting costs further, temporarily shutting more plants and possibly even getting some short-term relief from the UAW (despite recent bluster and posturing). The leaders understand how critical this situation is, and will react accordingly. I have faith (that seems to be missing from here lately ) they will provide a coherent, workable plan to Congress by 12/2 and they will get the aid needed to get past this NATIONAL economic crisis.

All the posters chiming in here with disdain for the Big Three should step back and take in the bigger picture. As Americans, we ALL lose if the US loses her domestic auto industry. We will all suffer, if nothing else due to the extrapolated costs of trying to re-train and support all the displaced workers 'liquidated' by such a collapse. Inflation would also be stoked ( read http://finance.yahoo.com/banking-bud...-GM-Goes-Under ) and consumer choice would be greatly restricted thereafter - at least for those who don't already adore anonymous Honda econobox sedans

And by the way... all you folks working at import-transplant-plants in the Southern US... you will be next - http://www.wtopnews.com/?nid=111&sid=1499073 (Don't kid yourselves. You are ALL "temporary contract help" to JapanGermany Inc. ). Without a Detroit Big Three putting foreign carmakers to shame about importing, why should they continue the charade? They'll pick up and move production to Singapore... Indonesia... etc. where it's even cheaper than the Southern USA. Why not? They will hold all the cards... and will rationalize they have to cut costs to fight inflation