Lawmakers Hedge Their Bets on Auto Bailout Detroit's automakers, making a second bid for a multi-billion dollar industry bailout, presented Congress with their plans to restructure their ailing companies and provided assurances that the funding will help them survive and thrive. American lawmakers were still divided Tuesday over a plan to bail out the auto industry as Detroit's Big Three carmakers submitted their recovery plans to congressional leaders. The plans from General Motors Corp., Ford and Chrysler were meant to provide assurances that the cash they are requesting -- as much as $34 billion -- would help them survive and thrive. GM warned that it may need as much as $18 billion in the coming months just to stay afloat and to weather potentially worsening economic conditions. All three were pledging to refinance their companies' debt, cut executive pay, seek concessions from workers and find other ways to revive themselves from the doldrums into profitability. "There isn't a Plan B," said GM Chief Operating Officer Fritz Henderson. "Absent support, frankly, the company just can't fund its operations." The executives also offered a series of mostly symbolic moves to burnish their images, badly tattered after they arrived in Washington last month on three private jets to plead for a federal lifeline for their struggling companies. Ford Motor Co., the first automaker to present its plan, said its CEO, Alan Mulally, will work for one dollar per year and the company will cancel all management bonuses if it has to take government loan money. GM CEO Rick Wagoner is also offering to work for a dollar a year and top executives will take major pay cuts, while Chrysler says its CEO, Robert Nardelli, already gets a one-dollar annual salary and receives no health care or other benefits. But some lawmakers still weren't impressed by the gestures or the plans. "Under public pressure, these companies now are willing to take draconian steps that they should have taken a long time ago," Sen. Bob Corker, R-Tenn., told FOX News, adding that he believes the automakers will have to go bankrupt. "I find it difficult to believe the steps are going to be strong enough." House Speaker Nancy Pelosi, however, suggested that allowing bankruptcies would create a harmful long-term problem. "I believe that an intervention will happen legislatively or from the administration," Pelosi said. "I think it's pretty clear that bankruptcy is not an option. ... A short-term loan is the appropriate way to go." Pelosi sent a letter to lawmakers Tuesday advising them of a potential House session next week to wrestle with an auto rescue package. Senate Majority Leader Harry Reid might get the ball rolling on legislation starting Monday, but it's still unclear whether Congress will deal with an auto industry rescue plan this year. General Motors said it needs $4 billion in government loans this month and a total of $12 billion by late March to keep operating, plus a $6 billion line of credit in case market conditions worsen. The troubled automaker said it plans to slash its numbers of workers, vehicle brands and plants by 2012. Ford, in better shape than GM or Chrysler, asked for a $9 billion "standby line of credit" to stabilize its business but said it didn't expect to tap the funds unless one of Detroit's other Big Three went bust. Its plan projected Ford would break even or turn a pretax profit in 2011. The company plans to cut its number of dealers by more than 600, to 3,790 by the end of the year. Chrysler says that without a federal loan, its cash could fall below the minimum amount required to run the company in the first quarter of next year. The company said in a plan for federal loans delivered to Congress on Tuesday that it would seek $7 billion from the government by Dec. 31. House Minority Leader John Boehner remained skeptical of any sort of rescue package for the Big Three automakers. "I don't understand what the role for the taxpayer is" in their recovery plans, he told FOX News. "There ought to be a reasonable expectation to get our money back." Boehner, R-Ohio, also said the auto industry should "pony up" some of its own resources to save itself "before they come in here and ask. Until then, they're just making noise." But other lawmakers were hedging their bets. Reid declined to commit to an auto bailout vote next week. "Not at this stage," he told FOX News, explaining that the automakers' proposals for what to do with some of the billions they are seeking, coupled with hearings, would determine whether a vote occurs next week. The Senate committee plans to hold an emergency hearing on Thursday. Asked if any of the Big Three automakers is too big to fail, Reid said: "No one's too big to fail. We hope we can work something out, but we have to have something with accountability and viability. We don't want to throw them a lifeline if that lifeline won't get them to the shore." Democratic Sen. Chris Dodd, chairman of the Senate banking committee, said in a statement Tuesday that the failure of any of the Big Three "could have catastrophic consequences" on the economy. But he said the companies "must convince Congress that they are going to shape up and change their ways" if they're petitioning for taxpayer dollars. A sense of bailout fatigue appears to be consuming Capitol Hill after numerous financial industry bailouts, including $700 billion for the Troubled Asset Relief Program. One senior Democratic leadership aide told FOX News, "If they aren't from states that are affected by this, members really don't care." The Big Three CEOs did themselves no favor, too, when they flew to Washington separately in corporate jets to attend congressional hearings last month. A senior Democratic aide to the Senate Banking Committee, which is set to hold a hearing with the three CEOs again on Thursday, told FOX News that there's a better chance something may be done in January when a new Congress convenes. House Majority Leader Steny Hoyer of Maryland was somewhat more optimistic. "If we believe there's a possibility to pass legislation that would lead to continued viability, with accountability," then the House will return to consider a package, he said. At this point, however, the House is not scheduled to return. Rep. Sandy Levin, D-Mich., who supports the bailout, said the auto industry's troubles extend beyond his state. "This isn't only a Michigan problem, it isn't only a U.S. problem, it's a global problem," he told FOX News. "The credit crunch has hit global production.We're talking 70 percent of America's auto production. Do we want it to fail? The answer is it would ripple throughout this economy." FOX News' Trish Turner and Chad Pergram and The Associated Press contributed to this report. === GM, Chrysler Seek $11 Billion to Avert 2008 Collapse (Update1) By John Hughes and Jeff Green Dec. 3 (Bloomberg) -- General Motors Corp. and Chrysler LLC told Congress they need $11 billion in government loans just to survive the year. Democrats pledged to keep them out of bankruptcy without saying how. The aid requests delivered yesterday to U.S. lawmakers total $34 billion, more than a third larger than the plans they set aside last month, and heighten the pressure for action as a deepening auto slump quickens GMâs rush toward a default. While President-elect Barack Obama has said he favors an industry rescue, GM and Chrysler said yesterday they wonât be operating through his January inauguration without the money stalled by a deadlock in Congress. Democrats want to use the $700 billion bank-bailout fund, and Republicans favor tapping an Energy Department loan program. âI believe that an intervention will happen,â House Speaker Nancy Pelosi, a California Democrat, told reporters at a briefing yesterday as GM, Chrysler and Ford Motor Co. sent their plans to Congress. âEverybody is disadvantaged by bankruptcy, including our economy, so thatâs not an option.â Still unresolved is how Pelosi and Senate Majority Leader Harry Reid propose to break the impasse with Republicans and President George W. Bush over the source of funds for a rescue. The $25 billion Energy Department loan program to retool factories is no longer enough to cover the three U.S.-based automakersâ needs after a worsening economy forced them to boost their aid requests. November auto sales plunged 37 percent to the lowest annual rate in 26 years. âEmergency Positionâ GM is âin an emergency position,â Erich Merkle, an analyst at Crowe Horwath LLP in Grand Rapids, Michigan, said yesterday in a Bloomberg Television interview. âThey need the cash. They need it very quickly.â The largest U.S. automaker said it must have $4 billion this month, while No. 3 Chrysler said it needs $7 billion right away. GM says it requires $4 billion more by the end of January as part of a total request of $18 billion. Chryslerâs total is $7 billion and Dearborn, Michigan-based Fordâs is $9 billion for a credit line it said it may not have to tap. In exchange, the companies have agreed to slash their payrolls, shrink their dealership rosters and make other changes to ensure theyâll be able to pay the money back. The automaker chiefs will defend the plans at hearings tomorrow and on Dec. 5. GMâs 8.375 percent bonds due July 2033 slid 2.25 cents to 20.25 cents on the dollar, yielding 41.2 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. Fordâs 7.45 percent bonds due July 2031 declined 0.54 cent to 25.56 cents on the dollar, yielding 29.2 percent.
Bond-t; B-R protection [chapter 11]seems like the best idea; or simply sell those companys to Honda,Nissan Toyota. They know how run American /Asian companys. Only an arrogant private/wasteful management that flies in corp jets would pretend BK ptotection [note that name] is bad.Well those & big labor/buddies.............. Tell the Senators that; i have. And i have a GM olds,; Honda, Nissan, Toyota, Saturn[gm]is better over all i think. Also suggested if they bail out those bad managers/overpaid labor; then @ same time send every American 1 million bucks. If they do[& hope they do not] stupid stuff like GM loser/labor bail out; probably will be like a 200 day moving average-sell USA
What I don't understand is where were the tough questions when the banks wanted their bailout. Congress gave them and Paulson a blank check with no questions asked or any feigned outrage. How come all of the sudden congress is concerned with spending tax payers money on the auto makers but they didn't and still haven't made AIG and the banks give a detailed account of why they need our money and exactly what they are going to do with it and that we have a reasonable chance of getting repaid. At least the auto makers hire Americans who spend their money in this county and pay taxes. I don't think congress could pass the financial accountability test they are giving the big 3.