Report: Detroit Three bailout agreement reached

[SVT666]

Report: Detroit Three bailout agreement reached

A group of bipartisan U.S. senators have reached a compromise on an auto loan agreement that will provide aid to General Motors, Ford, and Chrysler. A press conference will be held a 2:30 p.m. EST to discuss the agreement. Shares of General Motors shot up 30 percent on the news. Shares of Ford rose even more sharply, up 40 percent.

[FoMoJo]

Any details?

This is all I could find.

[GoCougs]

The problem is that this is just a small cadre of politicians. A majority vote has to pass the senate, which by all accounts it won't. The House would also have to vote. Considering that congress goes on a two-month hiatus after tomorrow, it's unlikely anything will happen via congress.

[Vinsanity]

http://finance.yahoo.com/news/Officials-Dems-to-demand-apf-13634940.html

House Speaker Nancy Pelosi said: "Until they show us the plan, we cannot show them the money."

Real slick, Nancy. I'd like to see her reprise Cuba Gooding's role and Mulally, Wagoner, and Nardelli re-enact Tom Cruise's in that famous movie scene.

[SVT666]

Senate bailout ultimatum: Show us a plan and we?ll show you the money

[Updated - 2:45 p.m.] A bipartisan group of U.S. senators today announced they have agreed in principle to provide emergency loans to the Big Three U.S. automakers, but only if those companies can come up with a detailed plan that explains exactly how the money will be used, and why it will work long-term. Senate Majority Leader Henry Reid and House Speaker Nancy Pelosi said they have decided to forgo any vote on current proposals, and instead give the automakers up to two weeks to come up with a solid strategy. The goal is to put a bailout bill to vote on December 8th.

The agreement was engineered by Michigan Democrats Carl Levin and Debbie Stabenow, as well as Ohio Republican George Voinovich and Missouri Republican Christopher Bond. But Reid and Pelosi want to see a detailed plan.

?The decision has been made by the leaders to bring us back on December 8th after there have been some hearings on the plan,? said Sen. Levin.

?We want them to come up with a proposal we can get through here on December 8th,? Reid said, reiterating Levin?s remarks. ?We don?t know how much money they need and that?s one of the things they need to come up with.?

?Until they show us a plan, we cannot show them the money,? said Pelosi. ?Hopefully in another week or two we can see a plan.?

?We reject those who are advocating bankruptcy for the industry, we reject that,? said Pelosi.

?We are here to help,? explained Reid during the press conference Thursday afternoon. ?We?re not against the auto industry.? Rather, ?we intend to save it,? he said.

But Reid cautioned help will only come ?if they get their act together.? By ?they,? Reid means the U.S. auto executives. Both Reid and Pelosi said the automakers have not been forthcoming about what they really need, and their story is continually changing. Pelosi said one week GM was looking for funds to facilitate a merger with Chrysler, and the next week the auto giant said it was need of liquidity for ongoing operations. Pelosi cited a ?lack of clarity,? from the Big Three.

?The key is accountability and viability,? Reid said. ?That?s all we?re asking. It?s not too much.?

?This is about taking us to a path of positive viability and accountability,? said Pelosi. She cited national security and financial stability as the primary reasons for a bailout.

Various proposals are being floated, including fast-tracking the $25 billion originally set aside for alternative energy research and retooling. Other ideas include taking fund from the $700 billion bailout intended for the financial sector.

Pelosi said she disagrees with redirecting green energy funds. ?Any effort to divert funds is a step backward in assuring the viability and competitiveness of the US auto industry,? said Pelosi.

[Vinsanity]

“We reject those who are advocating bankruptcy for the industry, we reject that,” said Pelosi.

Oh just shut your worthless mouth, Nancy. You wouldn't know what's good for them if it ran over your foot.

[Tave]

If Congress bails out anyone I'm going to be slightly pissed, but if they bail out Chrysler I'm going to be hellishly irate.

[Vinsanity]

If Congress bails out anyone I'm going to be slightly pissed, but if they bail out Chrysler I'm going to be hellishly irate.

reminds me of a funny comment I read on autoblog...

So Rick Wagoner, Alan Mulally and Bob Nardelli are all driving to Washington for their bailouts. Nancy Pelosi is outside waiting for them.

Wagoner drives up to the steps of Congress in a 1971 Chevy Vega. As he steps out, the carburetor stars smoking, the wheels fall off, the engine blows a gasket, and the doors rust off their hinges.

"Have you learned your lesson?" Pelosi asks him.

"Gee golly, Ms. Pelosi! Am I glad to see you! I've learned my lesson this time! Look, I drove a Vega all the way up there. The engine kept on breaking, and I felt like the body was rusting all around me. It was the worst experience of my life. I want to make sure that nobody ever has to drive anything like this ever again.

Pelosi smiles. "Okay, Wagoner, I'll get you your bailout. Just wait here till the rest get here."

So Wagoner graciously thanks her and they get a tow truck to tow the Vega. Then Mulally drives up. He's in a 1974 Mustang II. Four-cylinder engine. A guy comes up from behind the car and kicks its fuel tank, and the whole things bursts into flames. He walks up to Pelosi.

"Have you learned your lesson, Mr. Mulally?" Pelosi asks.

"Yes, of course. This car was bad. I can't believe the company I run ever made anything like it. It was cramped, wall-to-wall vinyl, and you name it, it went wrong. I mean, I thought Mustangs were supposed to be sports cars, but this thing could barely make it up Capitol Hill. I promise you I'll work twice as hard as ever to make sure we never make another bad car like this one ever again."

"All right, Mr. Mulally, Ford can have its money."

Then Bob Nardelli comes up, and the others gasp in horror.

"All right, Mr. Nardelli, have you learned your lesson?"

"I sure have, ma'am. As I drove up here, my car's transmission's bands snapped, the interior felt like it came off a Yugo, I could barely see out the windows, the engine buzzed, and it handled like a freight train."

"And the lesson is?"

"Well, ma'am, we'll definitely fix the Dodge Caliber for next year."

Ford and GM got their money. Nardelli was convicted of treason and sentenced to death.

[S204STi]

If they bail out the Big Three it will be an epic disaster.

They need to go bankrupt, reform under new leadership with a brand new business plan, and they need to cancel and renegotiate any contracts with union labor.  Ideally, just boot union labor out altogether for good.

[SVT666]

Filing for Chapter 11 requires the automakers secure interim financing to get them through the bankruptcy proceedings.  Good luck with that.

[Tave]

Eh, that much capital is a lot of honey, no matter how many bees are on top of it.

[SVT666]

Eh, that much capital is a lot of honey, no matter how many bees are on top of it.

You think many banks would be willing to do that right now?  Banks can't even get loans, nevermind give them.

[565]

If they bail out the Big Three it will be an epic disaster.

They need to go bankrupt, reform under new leadership with a brand new business plan, and they need to cancel and renegotiate any contracts with union labor.  Ideally, just boot union labor out altogether for good.

Agreed,  we are just awarding them for sucking.

We should let them die.  Those that can't swim will drown.  That's the free market.

[JWC]

Things I've been wondering about the bailout:

1- The two to three million jobs that will be lost...are they all in the USA or is this world wide?  The reason for the question is because when this bailout idea first came up a few weeks ago, economists on TV stated that if the big three fail, 2 or 3 million jobs will be lost world wide.  Now, in the past week or so, the "world wide" part seems to have been dropped in favor of just saying "two or three million". 

Is this some ploy to make everyone think that it is 2-3 million jobs in the USA and that figure in reality reflects a world wide number that they don't want the public to realize?

2- Crowns and some F150's are made in Canada;  Fusions, Focus' and some F250-350's are built in Mexico.  Are the governments of Canada and Mexico going to help with the bail out so the US taxpayer isn't shouldering the full burden?

[93JC]

2- Crowns and some F150's are made in Canada;  Fusions, Focus' and some F250-350's are built in Mexico.  Are the governments of Canada and Mexico going to help with the bail out so the US taxpayer isn't shouldering the full burden?

Canada will help:
http://www.google.com/hostednews/afp/article/ALeqM5j0QaFajqnLX0g-Ww26o_57_aCeAg

[JWC]

Canada will help:
http://www.google.com/hostednews/afp/article/ALeqM5j0QaFajqnLX0g-Ww26o_57_aCeAg

Thanks, I needed that.

Now, the mirror that we ordered and installed on a 2003 F250 last week was made in Australia.  It's time for the Aussies to chip in.

[Vinsanity]

Filing for Chapter 11 requires the automakers secure interim financing to get them through the bankruptcy proceedings.  Good luck with that.

I suppose that could be implemented as part of the bailout; the $25b would be the interim financing necessary for the big 3's Ch.11 proceedings

[93JC]

Flexes, Edges and MKXes are built in Canada too.

[Galaxy]

Germany is considering bailing out Opel. Ford Werke AG is in very good shape.

[traumadog]

The question is this - with the possibility of cascading bankruptcies because of interrelated suppliers (and those viable suppliers possibly requiring cash-in-advance), will the government eventually create a receivership out of the domestic industry and run what's left, like when the government created Conrail out of Penn Central, Erie Lackawanna, Lehigh & Hudson, Lehigh Valley, Reading and Central of NJ Railroads in the '70s. 

Penn Central went belly-up first, and eventually dragged down all the neighboring roads in the area, and yet the government didn't let them die in favor of trucks, etc.  (which were its principal competition).  A decade later, it spun off Conrail and made it a public company again.

Either way, I'd bet the American Taxpayer will be on the hook for something (bailout or consequences of no bailout) - the question is what and how much.

[FordSVT]

Flexes, Edges and MKXes are built in Canada too.

Canada is the eighth largest auto producer in the world and the third largest exporter, after Japan and the US. More than 80% of Canadian-made cars are exported (mostly to the US). The automotive industry is the largest manufacturing sector in Canada, representing 12 % of manufacturing GDP and 24 % of manufacturing trade. Canada's annual exports of automobiles and auto parts exceed $65 billion and $30 billion respectively.

So yes, our government is very interested and involved in these proceedings. Next to energy it's our most important sector.

[Atomic]

Oh just shut your worthless mouth, Nancy. You wouldn't know what's good for them if it ran over your foot.

she not only has a right to speak up - it is her place. i do not agree with her on this one, but not everyone agrees with us. there is a lot at stake here. many jobs are at stake. everyone has an opinion. how sad it would be to live in a country where one cannot express her (or his) thoughts.

imo, bankruptcy looks like the best option. hopefully, liquidation will not follow. if a bailout becomes a reality, there must be significant changes to the corporate structure, production, etc... fortunately, we have hearing, and there are negotiations going on.

[Vinsanity]

she not only has a right to speak up - it is her place. i do not agree with her on this one, but not everyone agrees with us. there is a lot at stake here. many jobs are at stake. everyone has an opinion. how sad it would be to live in a country where one cannot express her (or his) thoughts.

imo, bankruptcy looks like the best option. hopefully, liquidation will not follow. if a bailout becomes a reality, there must be significant changes to the corporate structure, production, etc... fortunately, we have hearing, and there are negotiations going on.

sure, she has the right to say whatever she wants, but she also has the responsibility not to lead them to a slow, expensive death, which is exactly what this bailout will be without a proper restructuring process implemented.