Senator Harry Reid has revealed the devilish details of the bailout bill for Motown’s meltdown. First, as predicted here, the Dems are sticking to their guns. They’re insisting that the money come from the preexisting $700b Wall Street bailout, not the $25b Department of Energy Loans (which would incur the wrath of environmentalists everywhere). Under the Congressional bailout plan, Detroit could stick their snouts into $25b worth of Department of Treasury funds exactly one month after the authorization receives the President’s signature (should he decided to so affix). Automotive News [sub] crosses the i’s: “If enacted, the bill would direct the Treasury secretary to accept loan applications from companies three days after it becomes law and would require a decision on the applicant’s eligibility within 15 days. Disbursement of funds would have to occur within the following seven days.” Or what? They turn into a pumpkin? As for those strings attached, they’re no longer of the Jewish maternal nature (i.e. made of piano wire). “Companies getting loans would have to grant stock warrants or senior debt instruments to the government. Top industry executives would have to give up bonuses and golden parachutes; stockholders would receive no dividends.” Oversight board? Perhaps when Harry met Nancy they read TTAC. It’s nowhere to be seen. But there are other caveats…
“On the issue of viability, raised most vocally by the Bush administration, each company would submit to the Treasury secretary ‘a detailed plan on how the government funds requested will be utilized to ensure the long-term financial posture of the company.'” Erect?
And just in case some of those pesky transplants have their beady eyes on bailout bucks… “The bill restricts the funding to automakers and suppliers that have operated U.S. plants for all of the past 20 years. The interest rate would be 5 percent in the first five years and 9 percent thereafter.”
Hmmm. Don’t Honda and Toyota have 20-year-old U.S. plants? They wouldn’t, would they? In a world where the Chinese threaten to gobble-up GM and Chrysler whole, anything becomes possible.
“On the issue of viability, raised most vocally by the Bush administration, each company would submit to the Treasury secretary ‘a detailed plan on how the government funds requested will be utilized to ensure the long-term financial posture of the company.’”
I.e., how many executive bonuses 25B will buy.
John
“On the issue of viability, raised most vocally by the Bush administration, each company would submit to the Treasury secretary ‘a detailed plan on how the government funds requested will be utilized to ensure the long-term financial posture of the company.’”
It seems that we are looking foward to some really good cooked up business plans showing that GM will immediately turn a monthly 1 bn USD loss into a profit.
I’m guessing that each of these magical “business plans showing viability” will include the phrase “…..when the U.S. auto market returns to a historical level of 16M units per year….”.
Hopefully our lawmakers will include the ability to call “BULLSHIT!” when reviewing these “plans”.
Any chance senior execs get a big bump in base salaries as soon as this gets passed?
Like Tireguy, I’m looking forward to reading these plans.
I can’t figure out TTAC’s stance at the moment. It seems happy that Germany might nationalize Opel, but perish the thought that an US oversight board might tell Wagoner what to do and how to spend bailout bucks. Huh? I read Death Watch 214 and really didn’t find it very good — all about what not to do, nothing positive about what can be done.
We’ve had 3 years or more slagging Wagoner and his band of derivatives — I agree with that. But if the US government loans him big bucks, he’s better at disbursing these funds than some oversight board? Huh? Well, looks as though the insane Pelosi is going to allow Wagoner to write an essay entitled “How I saved GM”, give him a check for $25B and tell him not to spend it all at once.
So why is German nationalization okay, but US oversight no good?
Love the hog trough pic – it needs a photoshopped logo on the end plate though.
How does one “give up” bonuses and golden parachutes? If they’re in your contract…they’re in your contract.
I’d put even money on Red Ink Rick resigning and taking his millions of dollars before he signs a “no bonus or parachute” bailout. He’s an impotent leader but he ain’t stupid.
We need to figure out what Honda, Toyota, Nissan, Subaru, BMW and MB are doing in response to all of this. Are they pounding on their senators and congressmen? If I was them, I’d be saying “WTF?!”. After all, the transplants have paid much more in federal and state taxes over the last several years than the Big 2.8 has. And the number of American jobs that they’ve created is substantial. It’s not on par yet with the 2.8…but we are only a couple of years away from the transplants taking over the lead in the jobs metric, too.
@wmba:
TTAC doesn’t have a stance, TTAC writers do.
This gets to the meat of the matter, I think…we have no idea which manufacturers will apply to this pool, and for how much. GM can’t seriously be the only beneficiary of these dollars (as it appears in some of the comments on this site).
Do we know what Ford plans to ask for? How about Chrysler? and Honda/Toyota might want a piece too! If distributed equally, that would be $5B per company–do we know what GM seeks, and how that would be impacted if the maximum would be $5B? If we remove Honda + Toyota the largess provided (assuming equal distribution) would be only $8.3B–would that be enough?
the transplants have paid much more in federal and state taxes over the last several years
Link please……
my perception is they have massive state tax abatements and also artificially inflate the value of imported content to eliminate “profit”
but I’m willing to be convinced otherwise
@indi500fan:
the transplants have paid much more in federal and state taxes over the last several years
Link please……
my perception is they have massive state tax abatements and also artificially inflate the value of imported content to eliminate “profit”
but I’m willing to be convinced otherwise
Count me in to – All I ever read about the transplants was that they learned from the Big 3 how to play states off against each other and get not only tax abatement, but road & rail improvements and training funds from the “winning” state.
Not only that, but the transplants have met accusations over the use of “permatemps” (supposedly temporary employees with lower pay and fewer benefits, that get kept in that status for years) with stony silence. Not as much in the way of income taxes from lower paid employees.
Please add me to the “Link please……” request.
Honda has at least two plants that have operated more than 20 years. Marysville Ohio auto plant producing Accords opened in 1982 and East Liberty Ohio producing Civics in 1984.
This is entirely un-American in spirit and illegal in terms of international commerce. For years we (US) been cursing Aerobus for government subsidies vs. Boeing. And it was rightful argument. Now to bail out “domestic” industry, which manufactures most of its products abroad is absurd. As they are begging for tax money they heavily investing in overseas operations. By the same token, congress has no inclination to save shareholders investment. The “leadership” of those companies already took over the legal owners right of representation and proceed as it is their own property and domain. Russian oligarchs and their fortunes look extremely legit at this point.
Autonut you nailed it. The top management of GM runs GM for their benefit. They pay themselves as if they are the actual owners and they cling onto their top spots as if they are the rightful owners of GM
Either:
1. This is (wasted) water on dead vegetation
or
2. Nancy and Harry are going to find much displeasure among the Unions
brilliant tactic by the dems here. This way they can put the blame on Bush either way it goes.