In a press conference today, congressional leadership announced that it would not shut the door on a possible automaker bailout, giving the Detroit 3 until December 2 to come up with a plan to restructure their businesses. Which means the three stooges could be back in DC for an encore performance of their hit comedy routine “$25b, Please.” “The best way to proceed is to give them another opportunity to make their case, to the Congress and the American people,” says Senate Majority Leader Harry Reid (D-NV). “The key here is accountability and viability. That’s what we’re seeking. That’s not too much to ask.” Or is it? The compromise that was reached earlier today was nixed by Reid and Speaker of the House Nancy Pelosi (D-CA), not because it lacked accountability, but because it would likely have stripped efficiency retooling requirements from the already-appropriated $25b loan fund. So, instead Pelosi and Reid assigned an essay to Detroit’s CEOs entitled “how I would spend $25b to turn my company around.” The due date is December 2, and they must be typed and double-spaced. Don’t forget to show your work.
Category: Bailout Watch
Liberal bomb-thrower and “Roger & Me” documentarian Michael Moore described his “mixed feelings” about a proposed Detroit bailout in a CNN interview with Larry King, accusing automakers of ignoring workers and customers. The Detroit News was apparently more than a little surprised by the revelation, kicking off its coverage of the interview with its most wounded tone, saying “If you thought a high-profile, avowed fan of the Michigan autoworker would leap at the chance to support the Big Three’s clamor for a Washington bailout, think again.” Of course, if you aren’t emotionaly invested in a bailout, quotes like “I don’t think these companies, with these management people, should be given a dime, because that’s just going to be money going up in smoke or off to other countries,” shouldn’t be too surprising. Actually, Moore’s comments aren’t particularly interesting or substantive, thanks in large part to King’s softball, ego-boosting questions. Oh yeah, and the fact that Moore knows more about courting media attention than the auto industry. We just really wanted to post another picture of Halle.
MSNBC is reporting that auto-state senators’ aides say they’ve reached a compromise to throw money at “speed emergency loans” to Chrysler, Ford and GM. And speed is the drug of choice here. After The Big 2.8’s CEO shot themselves in their collective feet in front of a Senate committee charged with rubber-stamping the $25b deal, Republicans and Democrats knocked some heads together. The peacock people say the as-yet-unnamed legislators plan to present their proposal at a mid-afternoon news conference today (Thursday). The plan: the president’s plan. The bi-polar, I mean partisan, I mean bi-partisan group will attempt to “divert” money from the already approved $25b Department of Energy Loans– to tide Detroit over until the incoming prez can do his part to subsidize the failing automakers with taxpayer funds. But folks, as this Bailout Watch originally postulated, this is NOT a done deal. Far, far, from it. And I’ll tell you why…
Detroit has had some time to get used to watching the hometown team lose. After the D3 Execs’ dismal performance in DC, most of the country feels confident that federal moolah won’t flood Motown, but for the Detroit dead-enders, hope springs eternal. And their congressional enablers are standing by to keep expectations wildly unrealistic. The Detroit Free Press, home of Detroit doom denial, is running a cruelly hope-inspiring story this morning in which Democrat congressional leaders raise the possibility of another attempt at bailout before the year is up. Senate Majority Leader Harry Reid (D-NV) today “raised the prospect” of calling the Senate back into session in December, while Speaker of the House Steny Hoyer said it was “possible” that the House could come back in December as well. With a TARP raid off the table, Senators Carl Levin (D-MI) and Christopher Bond (R-MO) are working on a compromise bill which would accelerate the already-approved $25b retooling loans. There’s even a chance that such a compromise could be attached to an extension of unemployment bill which may call congress back after its Thanksgiving recess anyway. After Motown’s shameless display before the House Financial Services Committee over the last two days, we’d be pretty surprised to see this happen. But, y’know, whatever it takes to avoid facing reality.
The Detroit Free Press has been watching Bloomberg TV (who has the time?). And who should they see but Red Ink Rick Wagoner, the GM CEO whose testimony in front of the Senate gives new meaning to the words “clutch player.” Apparently, late in the game, Mr. Wagoner is ready to float away to Aruba on his golden parachute and take one for the team. Maybe. But he sure as Hell wouldn’t recommend it. [Quick aside. Never mind Rick Wagoner’s Gulfstream flight to Washington. Anyone want to bet that his compensation package includes free flights on the company’s planes AFTER his retirement? And what about golden Blue Oval Boy Alan Mulally’s family’s free jet travel? And Bill Ford’s access to the company planes? Where do you think HE goes with the jet and what exactly does HE do to keep Ford’s head above water?] “I’ll always do what’s right for the company,” Wagoner told Bloomies, boldly ignoring the prima facie case against the validity of any such assertion. “But even more critical during a difficult time period is having the best possible management team. We have a good team at GM. That’s not what I would recommend.” He wouldn’t recommend having a good team at GM? Ipso bloody facto.
The Detroit News reports that Senator Harry Reid has thrown in the proverbial towel for the Detroit bailout bill– at least for this week. Thanks to less-than-stellar Congressional testimony by Ford, Chrysler and GM CEOs, their plan to carve-out and carve-up $25b from the fed’s existing $700b bailout fund seems to have, as the Brits put it, come a cropper. “Senate Majority Leader Harry Reid said that he wanted to figure out some way to help Detroit’s struggling Big Three but that efforts to do so had stalled.” That’s a Gulfstream’s gas tanks’ worth of not good for Motown’s mismanagers. Taken literally, it means Reid won’t be following President Bush’s suggestion and perverting the intent of the existing $25b Department of Energy loans– for a quick-fix capital injection. Still, the federal trough is never totally closed to those who spend ten million plus on lobbying. “A bipartisan group from auto industry states is working to cut a deal on a scaled-down aid package. If agreement can be reached, Reid said the Senate could still vote on it as part of a measure to extend jobless benefits.” As the hearings over the last two days established, even $25b isn’t enough to see the D2.8 through next year. Which means that anything less is… a death sentence. Will GM CEO Rick Wagoner sleep well tonight, knowing that it’s game over? “It’s completely due to the credit crisis,” Wagoner said at today’s Senate hearing. So, yes, Tempurpedic bliss for the bailout boys. How messed-up is THAT?
In testimony before the House Financial Services Committee, Chrysler CEO Bob Nardelli agreed to match Lee Iacocca’s $1 per year salary if Congress would only give his firm their $7b chunk of the proposed automaker bailout. Ford’s Alan Mulally told the Committee he is “fine where he is,” and noted that he needs to make sure his executive team is “well motivated,” given the fact that the company is so not of the woods its deep within them. As usual, the worst performance was put on by GM CEO Rick Wagoner, who claimed to have cut his own salary by 50 percent. Not that he was lying, he just conveniently forgot to mention that he had reinstated it. To make matters worse, he played the Curly card (“I’m a victim of coicumstance!”). Red Ink Rick complained that he’d purchased GM stock “with my own money” which was now “worthless.” I’m paraphrasing here– I can’t take notes while having my mind blown. The idea that a CEO would buy his own company’s stock, oversee its demise and then complain about the losses to Congress in an attempt to get bailout bucks for the company that he flew into the ground is… awesome. This is the guy who has overseen eight years of lost profit, lost market share and cratering market cap. A Gulfstream jet setter who’s refused to step aside as a theoretical condition of a theoretical bailout. Then again, who’s surprised?
Update: Wagoner’s direct quote was “I have a significant amount of General Motors stock, including a lot which I’ve bought myself, which basically is valueless. ” Hear that stockholders? That’s leadership. Hat tip to ABC Political Radar
Mitt Romney reckons Detroit’s bailout brigade should get bupkis from Uncle Sam. Squat. Zero. Zilch. The big goose egg. Writing in The New York Times, the failed Republican presidential candidate and former Bay State gov leave no word unminced, claiming “Detroit needs a turnaround, not a check.” Quick digression. If that’s the quality of Mitt’s sound bites, it’s no wonder he got gunned down by Maverick. How about “Detroit needs root and branch revision, not more fertilizer?” No? OK, where was a I? Right… Romney exercises his CEO chops, giving readers of the Gray Lady a double dose of paternal hagiography and a lesson in economics they will soon forget. And then, the money shot. “A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.” Take away the craven “may”– call it a political reflex– and it looks like Mitt’s been reading TTAC. “In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.” True dat.
Chairman of the House Financial Services Committee Barney Frank (D-MA) spoke with NPR earlier today, and within a single question the bailout’s biggest backer was already undercutting his $25b pet project. “We don’t think it would be enough,” admits Frank, “If, on March 31, the president does not believe that this is going to get them the viability with energy efficiency cars, they have to repay the loan; they get no more money. If they can show by March 31 a plausible way to go forward, then we would consider giving more money, again, under equally stringent conditions.” NPR’s Steve Inskeep spends the rest of the interview trying to get Frank to make some sense… in vain. The best Frank ever offers is the cold comfort that his bailout plan is not as bad as the AIG bailout or the Iraq War. So, the bar’s clearly set pretty high.
GM Fastlane blog was launched with the usual blather about two-way communications between the suits and the “little people” (a.k.a customers), complete with assurances that executives really will (we swear to God) read your comments and respond. Aside from one remark by Rick Wagoner about one commentator’s girlfriend’s car (as I remember it), this has most decidedly not been the case. Now, GM PR Supremo Steve Harris has decided to use the blog to rant against the New York Times’ columnist Thomas “Don’t Call Me Kinky” Friedman. Yeah, that’s the spirit!
An Open Letter to Thomas L. Friedman
Dear Mr. Friedman:
On Meet the Press you said, “So, show me a plan…” on why GM should receive government aid to bridge the current global financial crisis. We’ve invited you repeatedly to visit General Motors and see firsthand all we are doing to transform our business and develop new, energy-saving technologies.
We’re disappointed you still haven’t taken us up on our offer. You would be surprised at what you’re missing:
Watching the pressed suits in front of Dodd’s Committee made me sad last night. (Yes, we can watch CSPAN in China. On-line. Amazing. Probably a ploy to dissuade the Chinese populace from wanting democracy.) Sad I was, because I had expected an “are you or have you ever been tearing out the very heart of America’s industrial base?” I missed that a lot. Gettelfinger made me sad. How could he throw GM under the bus by giving the employer of his $73/hr union sisters and brothers last rank on the viability scale? Saddest made me Rick Wagoner. If he would have done the Iacocca, if he would have said, “Yes, I work for $1, I’m not worthy of more,” the bailout package would already be in the can. He blew it. Now there I sat, tears in my face, and German as I am, I thought: Rick Wagoner? As in Richard Wagoner? As in Richard Wagner with a typo? Last night was Richard Wagoner’s Götterdämmerung. You watched the funeral march of General Motors. Someone got a napkin? Danke.
Sorry guys, too much domestic kerfuffle to carry this on (Sponge Bob! I don’t want to watch TV upstairs! Where’s my dinner?) Suffice it to say, TTAC will report on the hearings in various posts as we go along. My take so far: Dodd is an extremely convincing politician, in an avuncular sort of way. And judging from the panel’s opening remarks, this is a done deal. The tough questions are notable for their absence. Still, it’s early. Surely, someone’s going to rake these CEO and UAW guys over the coals, who all seem to be blaming something else. Were we too liberal with credit? Nooooooo. Of course not. And the euphemism for the bailout is a “bridging loan.”
UAW President Ron Gettelfinger is joining Detroit’s two-day testimonial of shame in Washington DC today, and in case there was any suspense about what he would say, he leaked his notes to the Detroit News. The shameless audacity of his position shouldn’t come as a surprise, given his (and his organization’s) track record. Still, it might just take your breath away a little. Step one on the Gettelfinger formula for success, prove that the D3 are going under. Not hard. Step two, refuse to do anything about it. “We do not believe there is any justification for conditioning assistance to the Detroit-based auto companies on further deep cuts in wages and benefits for active and retired workers. We would also note that in the cases where the Treasury Department has acted to rescue financial institutions, it has only imposed restrictions on executive compensation. It has never mandated cuts in wages or benefits for rank-and-file workers and retirees. Thus, there is no basis for singling out the auto industry for different treatment,” says Gettelfinger in his prepared remarks. Step three? Blackmail, baby. Read More >
—–Original Message—–
From: GM Grassroots [mailto:grassroots@gm.com]
Sent: Tuesday, November 18, 2008 8:42 AM
To:
Subject: Your message to Congress
Dear —
Thank you for letting Congress know that you think the American auto industry is a part of the fabric of America.
Here is a copy of the actual message you sent to let them know how you feel about saving this critical American industry.
“I am a consumer who believes it is important to have an American car industry in this country. I am asking for your help.
Some critics call helping America’s automobile industry a bailout. I strongly believe this is an investment to rebuild our nation’s economic engine. If we do nothing, the future our country faces during this downturn is clear. We will see even more economic upheaval, communities will lose substantial businesses and revenue, and thousands of jobs will disappear. The negative impact will be worse than anything we’ve seen in our lifetime.
We are at a crossroads, where given the opportunity, our nation’s auto manufacturers can lead once again. In 2010, we will see labor and health care reforms kick in. We will also see new electric vehicles introduced that will help reduce our nation’s dependence on foreign oil. And if it weren’t for the recent credit crunch, these companies would be on the road to succeed.
If Congress does not act, it will be the shortest and fastest road from recession to depression. Our economy is suffering enough. Please help prevent further job losses and devastation to our communities. I am asking that you give our nation’s car companies the opportunity to complete this turnaround.
We cannot afford to lose this cornerstone of our economy. We should not depend on other nations for our manufacturing capabilities or new technologies. And we do not want to contribute to an even deeper collapse that will leave too many people facing further economic uncertainty.”
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