Auto Bailout Tonight?

Discussion in 'Wall St. News' started by Cdntrader, Dec 18, 2008.

  1. CNBC says bailout imminent.
  2. TGregg


    The MSM has been reporting that a bailout is just around the corner for weeks. They kept on saying the senate was just about to approve the measure, again and again. Then the Whitehouse was set to do the bailout, again and again.

    But no bailout yet.

    Maybe they are right this time, blind squirrels, broken clocks and all. But don't count on it.
  3. As US Auto Bailout Nears, So Does Bankruptcy Option

    By: Reuters and AP | 18 Dec 2008 | 04:40 PM ET

    The Bush administration is weighing the option of a managed—or pre-packaged—bankruptcy in the US auto industry as it works out an aid package that is close to being finalized, the White House said Thursday.

    President Bush said in an interview with the American Enterprise Institute that he was worried about the impact a "disorderly bankruptcy" might have on financial markets and whether or not

    "Under normal circumstances, no question bankruptcy court is the best way to work through credit and debt and restructuring," he said during a speech and question-and-answer session at the institute, a conservative think tank. "These aren't normal circumstances. That's the problem."

    White House spokeswoman Dana Perino also said the deliberations on aid for the troubled carmakers are taking into account a startling decision on Wednesday by Chrysler to close its factories for a month and idle 46,000 workers beginning on Friday.

    "They're in a very fragile state right now," Perino told reporters.

    Chrysler is considered the weakest of the "Detroit Three" manufacturers and has said it needs billions in government loans now to avert near-term collapse. General Motors [GM 3.66 -0.71 (-16.25%) ] is also seeking immediate intervention to survive.

    Ford Motor [F 2.84 -0.30 (-9.55%) ] says it has enough cash for now, but is seeking a line of credit in case its finances worsen unexpectedly.

    Ford, however, supports the appeals by its rivals, fearing the failure of one or both would severely undercut its finances or drag it down, too, since the industry's supplier, dealer and other business networks are interconnected.

    The common threads have prompted White House and Treasury Department officials to move carefully this week through what they have called a range of options for Detroit.

    The Bush administration, which hands over to President-elect Barack Obama on Jan. 20, has been considering an assistance package since last Thursday when Congress failed to reach agreement on a bailout proposal.

    Auto makers consistently have ruled out bankruptcy, saying it would take too long and drive consumers away from their products since new car purchases would come with too much uncertainty about warranties and other ownership concerns.

    But the administration is at least contemplating a possible court restructuring as it factors which companies should receive money.

    "There's an orderly way to do bankruptcies that provides for more of a soft landing," Perino said. "I think that's what we would be talking about...I'm not saying that that is necessarily what would be announced."

    Congressional aides in both parties who have been closely following the auto bailout discussions suggested the talk of bankruptcy could be a negotiating tactic to try to extract more hefty concessions from the companies and autoworkers unions in exchange for granting short-term loans out of a $700 billion Wall Street rescue fund.

    And Perino said one of the factors preventing an announcement from the administration so far is that negotiations continue between the administration and the various sides that would have to sign on to a managed bankruptcy—entities such as labor unions and equity holders in addition to the companies themselves.

    Bush, a Republican, warned a week ago of the impact of an auto industry collapse on the rest of the recession-hit U.S. economy. The White House negotiated a bill with Democrats in Congress last week that would have provided up to $14 billion in immediate bridge loans for the carmakers.

    The legislation included conditions to protect taxpayers, ensure repayment and guarantee oversight. But the plan failed when Senate Republicans sought to negotiate tougher terms, including one provision that would allow the government to force bankruptcy, if necessary.

    A Moody's Investors Service report earlier this week said government aid paired with prepackaged bankruptcy was the industry's most likely restructuring scenario.

    In a prepackaged approach, concessions and financing are arranged before a court filing to accelerate and simplify restructuring.

    Chrysler's chief executive, Bob Nardelli, said last month the company needed an alliance and federal financing to survive.
    Copyright 2008 Reuters.
  4. GM, Chrysler Said to Be Poised for U.S. Loans to Get Into March
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    By John Hughes and Robert Schmidt

    Dec. 19 (Bloomberg) -- General Motors Corp. and Chrysler LLC would get U.S. loans to stay afloat until March under a Bush administration rescue plan that may be unveiled as soon as today, people familiar with the talks said.

    The government could take back the money should the automakers not comply with federal restrictions as a condition of receiving the funds, said the people, who asked not to be identified because the discussions are private. The plan isn’t final and may change, the people said.

    The aid is intended to help GM, the largest U.S. automaker, and No. 3 Chrysler avoid collapse because they may run out of operating funds by early next year. GM and Chrysler have said they need $14 billion to stay in business through March and are temporarily idling plants to trim expenses.

    “I’m worried about a disorderly bankruptcy and what it would do to the psychology of the markets,” President George W. Bush said yesterday during a forum at the American Enterprise Institute in Washington. Bush said he doesn’t want to “dump a major catastrophe” on his successor, Barack Obama. Still, he added, he also is “worried about putting good money after bad.”

    The Treasury Department may lend to the automakers through their credit arms, GMAC LLC and Chrysler Financial, to avoid having other industrial companies line up for access to the $700 billion Troubled Asset Relief Program, the people said.

    Using TARP

    “The idea of TARP is to help with troubled assets, so Treasury can do it this way, and it already has permission to do it,” said Ed Fredericks, a professor at Pepperdine University’s Graziadio School of Business in Malibu, California. “This is one way that Washington can do it without, possibly, having to deal with congressional oversight or at least limited additional oversight.”

    Greg Martin, a spokesman for Detroit-based GM, and Chrysler spokeswoman Shawn Morgan declined to comment. Ford Motor Co., the second-biggest U.S. automaker, isn’t seeking emergency aid.

    White House spokesman Tony Fratto said in an interview, “We’re not going to discuss any of the details, and especially since decisions haven’t been made.”

    The negotiations with the Treasury Department have involved the three U.S. automakers and each of their finance arms, one of the people said. The talks have been difficult in part because Treasury’s expertise is in banks, not manufacturers, the person said.

    While the option of placing Chrysler and GM into a prearranged bankruptcy has been considered, the administration decided that such a move would put Ford at a competitive disadvantage, the person said.

    GM is reeling from almost $73 billion in losses since 2004 and a 22 percent slump in U.S. sales this year, while Auburn Hills, Michigan-based Chrysler’s drop is 28 percent.

    GM reported having $16.2 billion in cash as of Sept. 30 and needs at least $11 billion to pay monthly bills. Chrysler ended last quarter with $6.1 billion and needs at least $3 billion to operate, Chief Executive Officer Robert Nardelli told Congress on Nov. 18.

    To contact the reporters on this story: John Hughes in Washington at; Robert Schmidt in Washington at;
    Last Updated: December 18, 2008 20:35 EST
  5. The Treasury Department may lend to the automakers through their credit arms, GMAC LLC and Chrysler Financial, to avoid having other industrial companies line up for access to the $700 billion Troubled Asset Relief Program, the people said.

    “The idea of TARP is to help with troubled assets, so Treasury can do it this way, and it already has permission to do it,” said Ed Fredericks, a professor at Pepperdine University’s Graziadio School of Business in Malibu, California.
  6. RPT-BRIEF-GM, Chrysler make progress in loan talks-source
    Thu Dec 18, 2008 10:29pm EST

    DETROIT, Dec 18 (Reuters) - U.S. auto bailout talks:

    * General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz), Chrysler make progress Thursday night in talks to secure federal loans-sources

    * Bush administration plan for automakers could be unveiled as early as Friday-sources

    * US aid would call for restructuring involving labor, creditors -sources
  7. CET


    History has shown that Paulson and others in the government do not have a neutral bias towards the market, as they like to announce major items before the open on options expiration. Tomorrow gives them the perfect set up.

  8. Yup:cool:
  9. mari



    Toyota may report a fiscal 2008 operating loss... hmm this is second time in its history since 1949.
  10. mari


    declining vehicle sales and the surging yen may put Toyoota significantly in the red... short this stock! at 65 still pretty high no?
    #10     Dec 19, 2008