Bail Out Automakers ... or let 'em fall?

[Rich Parsons]

By clicking on the media tab one can find some very important information, such as a recent ad that GM took out to explain their thanks and point of view.

The article is the third in the main section and is title, "GM's Commitment to the American People: Dec. 8 Ad in Automotive News"

Link Provided here to go directly:
http://gmfactsandfiction.com/wp-content/uploads/2008/12/congress-an-final-120408.pdf

 

[Rich Parsons]

To see the plan submitted by GM to Congress please look for the article titled, "Long-Term Plan for Viability Submitted to Congress"

Link:
http://gmfactsandfiction.com/wp-con...estructuring-plan-for-long-term-viability.pdf


The document is 37 pages long and is available for your reading.

 

[Rich Parsons]

No comments on the data provided?

 

[Carol]

$14 Billion Bailout has been approved by the house. 237-170. I don't see any clarification at the moment as to whether it is guaranteed loans or an out and out bailout.

The bill goes on to the senate where it is "likely to be met with some resistance".

In other words, prepare your wallet for another round of porkbarrell gimmees that are going to be tacked on to this bill.

 

[dungeonworks]

$14 Billion Bailout has been approved by the house. 237-170. I don't see any clarification at the moment as to whether it is guaranteed loans or an out and out bailout.

The bill goes on to the senate where it is "likely to be met with some resistance".

In other words, prepare your wallet for another round of porkbarrell gimmees that are going to be tacked on to this bill.

If you read more than you speculate, you'd see the BRIDGE LOAN has been shrunk and many more controls have been added via White House (Bush) and House Republicans. Also, you'd see it is likely to fail due to heavy resistance by southern Republicans.

Sorry if that seems stiff, not my intentions. There are real people and families that are gonna suffer if these companies fail....mine included.

 

[Carol]

My employer is failing. Don't think I don't feel it either.

 

[MA-Caver]

No comments on the data provided?

for some folks, reading 37 pages takes a while Rich. :uhyeah:

 

[KP.]

I'm of the opinion that the congress got this one exactly backwards.

There are plenty of financially healthy banks and financial brokers out there who would have gladly stepped into the shoes of the failing companies. There would have been some short term pain, but the services provided would not have gone away.

The automakers are different. They are one of the few large scale American manufactures left. And represent a significant percentage of employment for lower and middle class Americans in the areas surrounding the Great Lakes.

The economic impact of their failure would be, I think, more disastrous for our real economy due to the damage done to a huge percentage of consumers, than the failure of the financial institutions which would have been bought up by others after posting paper losses.

 

[The Last Legionary]

Congress needs to stop trying to help. They never do, they only make things worse.

Guard your women and children well,
Send These Bastards Back to Hell
We'll teach them the ways of war,
They Won't Come Here Any More
Use your shield and use your head,
Fight till Every One is Dead
Raise the flag up to the sky,
How Many of Them Can We Make Die!

 

[MA-Caver]

Well it's done then... can only wait and see what happens. Hopefully it'll be for the best.

Bailout approved: Automakers to get $17.4B


By DEB RIECHMANN, Associated Press Writer Deb Riechmann, Associated Press Writer – 3 mins ago
http://news.yahoo.com/s/ap/meltdown_autos
WASHINGTON – Citing danger to the national economy, President Bush approved an emergency bailout of the U.S. auto industry Friday, offering $17.4 billion in rescue loans in exchange for tough concessions from the deeply troubled car makers and their workers.
The government will have the option of becoming a stockholder in the companies, much as it has with major banks, in effect partially nationalizing the industry.
At the same time, Treasury Secretary Henry Paulson said Congress should release the second $350 billion from the financial rescue fund that it approved in October to bail out huge financial institutions. Tapping the fund for the auto industry basically exhausts the first half of the $700 billion total, he said.
On Wall Street, stock prices rallied as investors cheered the government's action, though early gains eased later in the day.

 

[Rich Parsons]

Well it's done then... can only wait and see what happens. Hopefully it'll be for the best.

GM and Chrysler the two to get the loans, have to show viability by March 31st of 2009 or be responible to repay the loans immediately.

I am sure that all the Committee requests would be required in any plan to be considered viable. So while this did not have all the Congressional oversight it still has watch dogs to make sure it was the best thing to do.


Thank you to everyone involved.

*************************

On a side note here is an article about the top selling vehicles for 2008.
http://autos.yahoo.com/articles/autos_content_landing_pages/782/the-years-bestand-worst-selling-cars

The F-150 attracted 473,933 buyers this year, making it the No. 1-selling vehicle for 2008--it's been the best-selling vehicle in America for 27 years running. Another 431,725 buyers drove off Chevrolet lots in a Silverado

 

[Rich Parsons]

GM's statement on the Loan:

(from: http://gmfactsandfiction.com/ )

GM Statement on Administration Providing Bridge Loan to Domestic Auto Industry
We appreciate the President extending a financial bridge at this most critical time for the U.S. auto industry and our nation's economy. This action helps to preserve many jobs, and supports the continued operation of GM and the many suppliers, dealers and small businesses across the country that depend on us.
This will allow us to accelerate the completion of our aggressive restructuring plan for long-term, sustainable success. It will lead to a leaner, stronger General Motors, a GM that is:

• dedicated to great products, exciting design, and world-class quality
• fully committed to leading in energy-saving vehicles and technologies, responsive to the needs of our customers, our stakeholders and the communities we live in and serve.

We know we have much work in front of us to accomplish our plan. It is our intention to continue to be transparent as we execute our plan, and we will provide regular updates on our progress. We again thank the Administration for this important support of our industry at this challenging time, and we look forward to proving what American ingenuity can achieve.

 

[BrandonLucas]

GM and Chrysler the two to get the loans, have to show viability by March 31st of 2009 or be responible to repay the loans immediately.

I am sure that all the Committee requests would be required in any plan to be considered viable. So while this did not have all the Congressional oversight it still has watch dogs to make sure it was the best thing to do.


Thank you to everyone involved.

*************************

On a side note here is an article about the top selling vehicles for 2008.
http://autos.yahoo.com/articles/autos_content_landing_pages/782/the-years-bestand-worst-selling-cars

This may be a dumb question, and it may not even be possible, but:

What happens if they default on the loan?

 

[Rich Parsons]

This may be a dumb question, and it may not even be possible, but:

What happens if they default on the loan?

That was Not a dumb question.

If the smae thing as the Congress requested is implemented then the US Government Supercedes all other debt and they cannot be written off in a Chapter 11 Bankruptcy. So the worse case scenario is that they fail and the US Government steps in sells off the pieces for the money they loaned. Of course with the latest report from the Governors (9 in particular - article on Yahoo ) that 3 millions jobs would be lost for the auto industry it looks like another 3 million plus jobs would be at risk or lost in the immediate cascade.

This is not to say do this or else that will happen as in black mail. The issue is that if GM alone goes into Chapter 11 they have to remain there for 3 years by law as part of the restructuring. The Cost to the Federal Government in the first year is estimated at $150 Billion to $250 Billion.


So, if the short answer is if the US Government (* Read new administration - Legislative and Executive *) does not like the auto maker plans by 3/31/09 then they could make a call on the loans. They would be first in line to get teh value of the company in a sell off. i.e. Chapter 7.

 

[dungeonworks]

Well it's done then... can only wait and see what happens. Hopefully it'll be for the best.

I agree. My family, myself, my neighbors, my community too. Thing is, why didn't the senators pass this (virtually the same dang package!) rather than tossing Bush in front of the bus? I am no Bush fan by any stretch, nor could I or would I pretend to be now....but man alive, the Republicans showed true colors putting it all on him. Had the auto's failed, Bush would be the president that kicked off a depression. If we emerge stronger and more viable, Obama is going to get the credit because we are still a couple years away from being "out of the woods" so to speak.

....but I will not be sad to see the Obama family unloading the U-Haul on the White House lawn come January 20, 2008!!! :ultracool

 

[Carol]

I agree. My family, myself, my neighbors, my community too. Thing is, why didn't the senators pass this (virtually the same dang package!) rather than tossing Bush in front of the bus?

Because they were listening to their constituents? :idunno:

Fingers crossed for everyone though. I hope this will result in a positive turnaround...especially in a domestic climate that is becoming more and more hostile to manufacturing in general.

I am no Bush fan by any stretch, nor could I or would I pretend to be now....but man alive, the Republicans showed true colors putting it all on him. Had the auto's failed, Bush would be the president that kicked off a depression. If we emerge stronger and more viable, Obama is going to get the credit because we are still a couple years away from being "out of the woods" so to speak.

....but I will not be sad to see the Obama family unloading the U-Haul on the White House lawn come January 20, 2008!!! :ultracool

Man oh man, I hope he does well. Expectations on his presidency are insanely high, and he's being saddled with issues (economy, war, etc) that just aren't going to be fixed overnight. I don't think we're out of the woods either but I hope the roads from here onwards are less bumpy...

 

[Rich Parsons]

Because they were listening to their constituents? :idunno:

This is the part that confuses me. (* Not directed to Carol *)

No one wants the Finance heads to loose their jobs.

No one is calling their Senators or Representatives to tell them to not release the second half of the 700 BILLION. Yes, they still have not release the second 350 Billion US Dollars. They have no oversite in the finance community.

The Finance community CEO's are in the top 50 for top 500 paid CEO's, while the Auto industry is told (* which I agree they should *) $1 for pay with no special golden parachute stock option plan. The CEO of GM is in the last 50 of the 500, with the FORD CEO that came from Boeing being the high paid of the three. GM being the lowest. Chrylser higher than GM but still much lower than Ford.

So, why is no one creating special Committees for the finance industry?


If they fail, yes it hurts the economy, but how does the US Government get any of their money back as most likely they will be holding debt with no assets.


Also no one really understands that Federal Reserve has has agree to buy up $200 BILLION US Dollars of High Risk Debt from the Finance groups to reduce their risk level. They have agreed to buy up $100 BILLION US Dollars of BAD Debt, this is such high risk no on expects to see the complete return. The Federal Reserve also agreed to release another $500 BILLION into the economy, which raises inflation that the people pay over time.


While I think the $1 Pay for CEO's and over sight to make sure no parties and golden parachutes are given is good, how come there is so much concern for $15 - $33 Billion US Dollars when $1.5 TRILLION pumped into the Finance "industry" with no real concern or over sight?

I have made my opinion to my elected officials on this issue known but I have not been given updates on this like on the issue for the Auto Industry.


Confusion on my part. :idunno:

 

[Carol]

Confusion on my part too, for that matter. I was never a supporter of the finance bailout and have been absolutely livid as to some of the funds have been spent, and have been disgusted that this is being done without oversight. They've been spent for big banks buying out mom-and-pop banks, for executive junkets, for other wasteful morass that has nothing to do with freeing up the credit market.

But...what do I know? I just work for a living...or at least I will until my company falls apart...

 

[Bob Hubbard]

Because it's not Congress doing the bailing out, it's the Private Federal Reserve who is doing it, running their presses 24/7, and continuing to deviate from the plan finally agreed upon by the traitors and incompetents in Congress. Paulson's doing what he want's, the hell with us all.

 

[Rich Parsons]

Because it's not Congress doing the bailing out, it's the Private Federal Reserve who is doing it, running their presses 24/7, and continuing to deviate from the plan finally agreed upon by the traitors and incompetents in Congress. Paulson's doing what he want's, the hell with us all.

Bob,

I agree that $800 Billion is from the Federal Reserve, but the $17.4 Billion that the Auto Companies get as loans with stipulations comes from the TARP funds authorized by Congress. The TARP funds were the monies authorized for the Finance Companies with no stipulations. The Sitting President Bush, authorized the money to be loaned with the stipulations in place also placed there by the current POTUS.

So, why did he or Congress not go back and place simular stipulations in the Finance Companies?

Why are not people writting articles about it in the press?

Why are not people on this board starting threads about the finance companies with their outrage?

Why are not more people calling and writing their representatives to complain about the $350 ( - 17.4 for the Auto Companies with Stipulations ) given out without stipulations? Why are not people creating committees for the proposed release of the second half of the monies?

This is my confusion.