Non-industry bailout supporters almost always qualify their backing with a number of conditions to be placed on automakers who receive government assistance. As Automotive News [sub] reports “The problem with the plan included in the energy bill: the string attached. Actually, it’s more of a rope. A cable even.” One such rope or cable is the requirement that retooled factories produce vehicles which are 25 percent more efficient than their competitors. Though that may be theoretically possible, AN worries that regulating the loan program could be a nightmare. Unsurprisingly, the Project For A New Generation Of Vehicles (PNGV) is brought up as an example of what happens (or not) when the government gives Detroit money without attaching firm enough conditions. And just like that, there’s another article in Automotive News which reports that automakers are calling on Washington to “change restrictions attached to the money that may impede its benefit for the struggling companies.” An industry lobbyist confides that preliminary conditions were written-up when the energy bill passed last December, but they “were not given much thought at the time.” The big problem? The requirement of 25 percent efficiency improvements, of course. GM CEO Rick Wagoner says that efficiency gains are “typically made in smaller increments.” No kidding, Rick. Detroit got over a billion to develop a new generation of fuel-efficient vehicles starting in 1993 and we still haven’t seen any tangible results, thankyouverymuch. Meanwhile, Nancy Pelosi has not made clear if she is willing to change restrictions on the use of the money or how that would be accomplished. Furthmore, she says that “full funding” of the loan proposal is still up in the air since their are many other programs fighting for access to the federal teat. Stay tuned for future Wagoner press conferences calling on the government to distribute the $25b “in unmarked bills, stuffed in a suitcase and hand delivered to the RenCen.” After all, if Detroit were into the whole “accountability thing” it wouldn’t be asking for a bailout in the first place, would it?
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I’m sure Wagoner would pull a DB Cooper and use his golden parachute to escape with the suitcases…
Just like the fools in government handing out $2,000 pre-funded debit cards to the people in New Orleans after Katrina, and we were surprised a lot of that dough went for drugs, booze etc? I guess GM and Ford just want a pre-funded debit card also, to do with what they please, no strings attached, no payback on the money.
If this doesn’t prove the dire straits the Detroit auto makers are in, nothing will.
No money for them!!!!!!!!!!!
It would be interesting to see if they could admit their own culpability if that was a requirement for the bailout. I would like to see Rick and Lutz asking for a handout and saying: “Yes, we are incompetent. Yes, we have mismanaged GM. Yes, we need a brazilion dollars to bail the company out. Just give it to us, now. Please.”
It’s now, suddenly, become obvious that we’ve been much too hard on the Detroit fellas. The stock market shot up the most in 6 years today on a new plan from that hotbed of capitalism, that would be Washington, DC, that would provide a permanent plan to shore up financial markets. So, I guess we can call this a precedent. So I look for the feds to to start buying GM stock any day now.
There is no end in the way D3 can game this. While technically, the bailout money won’t directly fund their real priorities- “retention bonuses”, for example, it could free up other parts of their normal budget for
those bonuses.
Instead, the bailout money should come in the form of a performance contract(of sorts). All executives above a certain level are required to wear barrels instead of suits until the money is paid back. Of course requiring them to sleep in these barrels would be cruel and unusual punishment. So just wear them to work. And to the grocery store. And country club. And no gluing ties to the front of them or pin striping them either.
I kinda like the barrel idea.
The whole efficiency thing is a straw man. It will be forgiven at a later date in trade for proper payments through concessions to labor or bribes donations to the right campaigns and causes.
If they are going to give these clowns bailout money, I mean retooling cash, they should set it up like we set up our construction contracts with contractors to get paid for their work. With strict goals, drop dead dates, and criteria to get their money when they meet each milestone.
And have an independent company come up with the rules and guidelines and make them sign off on them before they get each check.
Do XYZ before such and such date, get a few billion. And again and again until we have reached our goal of the fuel efficient cars the government is requiring to be produced. And no hiding stuff about the products and what’s being planned for each dime, you want our money you become as transparent as glass.
And if the corrupt executives at he top lie, cheat and use the money inappropriately, do not pass GO, do not collect $200, go directly to jail and have your assets seized.
Seeing as this mythical $25b is coming out of the taxpayer ass, why not give it back to said sodomized taxpayers in the form of incentives to buy cars that get more than xx mpg? Or better yet, just keep the effin money to pay back the other pigs gorging themselves at the trough. Ever heard of not spending money you don’t have??
Anyway, the money was “earmarked” for ‘energy efficient’ cars, right? I can’t think of anything less energy efficient than giving the D3 group of losers more money to piss away.
Smarten up, Pelosi. Oh wait, this is you being smart. Ugh.
Now that personal income taxes are no longer supporting the federal government, but rather private corporations, from whom we receive no benefit in return (unless further direct payment is given for a good or service), I would suggest that legislators give full authority to these businesses to collect tithes from those citizens privileged enough to co-exist in their society. Honesty is the best policy, no?
We might also fix the idea that the United States practices free enterprise capitalism. Again, the honesty thing.
…GM is ‘too big to fail.’
When you look at the attributes of a car with good gas mileage then compare it to Chevy Aveo it is obvious that the car companies do not employ what efficiencies they know.
All the US government needs to do to start things off is get the cars that have good mileage and state. “GM and ETC… you must employ those technologies now.
After that, think about giving them some money.
This is an interesting comment on the subject:
If Michigan weren’t an Electoral College swing state, there probably wouldn’t be nearly as much bipartisan enthusiasm for car industry bailouts.
Also, this ought to warm some hearts:
Its chairman, Rep. Henry Waxman, a California Democrat, had a different outlook from Pelosi’s on chances for reform legislation in the next few months.
“We’re not going to pass legislation this year,” Waxman told reporters on Wednesday. “It’s going to end up in the hands of the next administration and the next Congress,” he said, adding that this Congress “has to find out what happened, why it happened, who is responsible and how we ought to go forward in the future.”
Sounds like a responsible plan to me. Too bad he’s talking about the financial sector meltdown and not the car bailouts.
The first restriction should be to require cleaning the executive suites of the suits who created these problems in the first place. If the 2.8 hadn’t been completely focused on maximizing short term truck profits for the past 15 years and had been INVESTING IN THE LONG TERM HEALTH of their companies then they wouldn’t be in this pickle.
But long term investing has become anathema to many US businesses and we are all paying a heavy price for it.
Intel, Microsoft, Apple and Cisco all get it. They make massive investments across their product lines and into new business areas consistently over time without significant federal handouts. Any of them could radically improve their short term profits by cutting out everything except their currently most profitable product lines … and they would be stupid to do so.
I’m a Democrat and have been since I started voting in 1980, but there are some issues I cross lines with, and this is one that I agree with the folks commenting here on.
I think American executives have for many years been way too focused on short term profit — worried about losing their high paying jobs and putting into play business plans that last just long enough until their posh retirement pensions, or at least golden parachutes, kick in.
You’d think the US automakers would at least learn from the history of their first mistake. Inventing the 4 cylinder engine but not putting it into production due to concern over short term profit if the chassis assembly lines were changed to smaller chassis, and then not being able to react in time to salvage market share from the Japanese and Europeans who were proactive and long term visionary.
When history repeated itself recently, this time taking not only a high gas price cost but also a growing population of green consumers worried about the (long term) costs of global warming, hybrid electric market share went to the Japanese.
Why should such short-sighted strategy be rewarded by taxpayers? Let’s allow the market to reward the visionary executives, and perhaps American executives will change some day as a result.