Obama administration set to announce it will give more money to General Motors, Chrysler

[steven johnson]

Source: Associated Press

President Barack Obama's auto industry task force was expected to offer additional aid to General Motors Corp. and Chrysler LLC while setting firm deadlines for the companies to get concessions from their stakeholders.
GM and Chrysler, which employ about 140,000 workers in the U.S., have already received $17.4 billion in government loans to survive the economic downturn and the worst decline in auto sales in 27 years. GM is seeking another $16.6 billion, while Chrysler wants $5 billion more.
With the companies running out of money heading into April, any short-term aid would help the auto manufacturers maintain their operations while they seek concessions. Administration officials declined to comment on the plan Saturday.
Task force members have said bankruptcy could still be an option for GM and Chrysler if their management, workers, creditors and shareholders failed to make sacrifices. The conditions could be more stringent than the loan terms set by the outgoing Bush administration in December, officials have said.
Both companies are trying to reduce their debt by two-thirds and convince the United Auto Workers union to accept shares of stock in exchange for half of the payments into a union-run trust fund for retiree health care costs. The loan agreement also called for executive pay cuts and labor costs that are competitive with Japanese automakers with U.S. operations.
GM owes roughly $28 billion to bondholders, while Chrysler owes about $7 billion in first- and second-term debt, mainly to banks. GM owes about $20 billion to its retiree health care trust, while Chrysler owes $10.6 billion.






Read more: http://www.newser.com/article/d9778e581/obama-administration-set-to-announce-it-will-give-more-money-to-general-motors-chrysler.html

[MercutioATC]

1. Hell, why not? We're throwing money at everybody else.

I still have some silver fillings I can cash in...

[Oregone]

13. Everyone except, uh, well, us

[MercutioATC]

18. Well, yeah...there's that...

[BlooInBloo]

2. Sigh. Even with the uber-protectionist policies, they STILL can't stay in business...

There's a lesson to be learned on this one.

I hope those "more stringent" condition include the sacking of all executives at all of the EPIC FAIL companies.

[Brucie Kibbutz]

24. uber protectionist policies?

Could you be more specific?

[BlooInBloo]

26. There's a reason why Japanese cars commonly cost a couple grand more than American.

[Brucie Kibbutz]

29. Could you be more specific?

:shrug:

[Brucie Kibbutz]

33. Still waiting to hear about these protectionist policies...

:shrug:

[anonymous171]

52. What protectionist policies? nt

[maddezmom]

3. steven johnson

Please be aware that DU copyright rules require that excerpts of copyrighted material be limited to four paragraphs.

[steven johnson]

19. My apologies

Sorry about the miscount. I will endeavor to be more observant.

Please delete the last paragraph.

[jody]

4. I don't know how much more good news like this I can afford but I keep chanting "Hope, Change". n/t

[biopowertoday]

43. Many religions do the chants--faith over reason.

[cadmium]

5. I am going to do my part

and buy a Pontiac Monday.

[Tim01]

6. Well that's pretty cool. What 'cha getting? nt

[cadmium]

47. Vibe AWD If they do what

they promised the other day and give 0% financing. I really like this car. Not a pure American buy since 38% is made in Japan and 62% made in America. I am spurning family advise to by the equivalent Toyota Matrix. No more Toyotas for me right now.

[Tim01]

7. At least it isn't our money.

They are just printing more money to distribute. I can't believe that isn't illegal or something, but there it is.
Of course it does make our money worth less.

[54anickel]

8. It's basically selling our kids, grandkids and future generations into a form of slavery. But hey,

At least it isn't our money.

[Tim01]

9. Makes me feel sick. I was hoping for something different.It really does make me sick.

[RUMMYisFROSTED]

11. True...but....

It's really changing that twenty in your wallet into a sawbuck.

No one knows what the future(grandkids) holds but we know what the present(your wallet) holds.

[54anickel]

16. Absolutely, that's a given.

I was trying to point out the narrow self focus of the "at least it isn't our money" comment.

We do know the future holds a huge deficit, whether that matters or not I suppose time will tell. Maybe we'll just draw a couple extra zeros on the face of the currency in our wallets and call it a day.

[Swagman]

10. I wish it came with the proviso-build a green car

[Tim01]

12. That's a great idea!

[depakid]

44. That's what the Rudd government did with its bailout of GM in Australia

Essentially said- you're going to make more efficient vehicles, or you can take a hike.

[EFerrari]

14. "consessions from their stakeholders"? Does that mean, screw the unions?

:shrug:

[blue_onyx]

20. Pretty much

I guess a 50% pay cut isn't quite enough. And yet Wall Street still gets money thrown at them. If there are any strings attached for Wall Street, they bitch and threaten to give the money back....and our government basically begs them to keep the money. I can't understand the double standard.

[OhioChick]

15. When is this administration going to get it?

They can keep throwing money at companies every few months, but until people have JOBS....they won't be buying cars or anything else.

[ColesCountyDem]

17. Much as I'd prefer forcing them into Chapter 11 bankruptcy...

I'd prefer that these companies all be forced into a Chapter 11 bankruptcy, except that it would hurt the retirees and alter the current labor contracts that were arrived at at arm's length and in good faith. In a Chapter 11, the bankruptcy judge could 'cram down' some provisions that their creditors would otherwise not agree to, and the companies would have to submit a realistic business plan that would carry them forward out of bankruptcy within a reasonable time.

If there were some way to protect the worker's rights and pensions as currently agreed to, then I'd much prefer bankruptcy to a loan/bailout.

[Sen. Walter Sobchak]

21. I would much rather send them right into Chapter 7

Change the bankruptcy code so pension obligations to retirees are super-priority liabilities (get paid first and in full), flush and repeat.

For the US economy to really recover alot of completely worthless monopolist corporations need to die so healthy companies can take their place.

[blue_onyx]

23. Oh yeah, that's smart

Take an economy that's already in crisis and make it worse by eliminating millions of jobs.

[Sen. Walter Sobchak]

25. Do you really believe corporations like GM and United Airlines can be saved?

How much are we helping the economy by trying to put out a fire with buckets of gasoline soaked money only to reach the same end result?

[blue_onyx]

30. Yes I do

First, this isn't unique to US automakers. Toyota has asked Japan for assistance. Others auto companies, like Honda, are considering asking for assistance.

Allowing the US auto industry to disappear would devastate our economy. The idea that "better" companies would rise and take the place of these companies isn't valid. The auto industry is a capital intensive industry so it's not so easy for new companies to rising out of nowhere. It would be years, if not decades, before new companies would be able to fill the void left by the US companies. Toyota has publicly stated they don't want their US counterparts to go under because the damage to the supplier network would hurt them too (despite what Sen. Shelby thinks).

I believe people who support allowing GM and Chrysler to go under (and Ford would likely follow) are allowing their hatred of these companies to blind them from supporting what's in the best interest of our economy.

[Sen. Walter Sobchak]

31. Detroit was moribund BEFORE the present crisis began

If your competitor is getting a handout from their government, you going to go sniffing for a handout in the name of "remaining competitive" too.

The problem in the US is that for much of the 20th century until present there has been basically no limits of corporate consolidation in the United States and this has created our worthless corporate behemoths in numerous industries that have been blessed "to large to fail" but at the same time are much too dysfunctional to compete or even productively function.

What is good for our economy is industries with diversified participants who are agile, responsive and not a crippling loss to the system should any one company fail.

A bunch of zombie corporations that only exist because they are "too large to fail" and exist only at the mercy of the treasury is NOT good for the economy.

[blue_onyx]

34. Toyota and others get handouts from the US too

When southern states give hundreds of millions of dollars in "tax incentives," it's a gov. handout....except they don't have to pay it back. Apparently you are willing to overlook the handouts given to Toyota and blame those on GM too. Too bad your theory about Toyota going to Japanese government because GM went to US gov. doesn't apply to trade policies. If the US was smart enough, they would fix the unfair trade policies that benefit foreign companies. It's BS that foreign countries have high import taxes while we don't because of "free trade.". It's BS that South Korea limits US auto companies to sell only 4,000 vehicles in their country. There's a whole lot more to the US auto companies troubles than them being "dysfunctional."

GM isn't dying and will be around for many years to come. The loss of millions of job would push our economy from a recession into a depression.....all so people like you can let their hatred of GM/Chrysler out. Thankfully Obama is making the calls when it comes to the economy and not you.

BTW...should the banks be allowed to go under too?

[Sen. Walter Sobchak]

36. I am firmly of the die motherfucker die perspective

No bailouts for anybody and the banks should have been the first to be left to die. The corporate welfare from the south is just stupid because the factories were going to be built in right to work southern states with or without the aid.

The trade issue doesn't really fly because the American automakers do the exact same thing, Ford for example manufactures cars for sale in dozens of countries. How many more cars does Ford sell in France than Renault sells in the United States?

Temps de guerre commerciale! Temps de guerre commerciale!

[ColesCountyDem]

38. Unfortunately, it's hard to remain a 1st world nation w/o and auto industry.

There simply isn't a 1st world nation that doesn't have automobile manufacturing capacity. In terms of national defense, it would be INSANE to just let the auto companies die.

[Sen. Walter Sobchak]

39. So Toyota, Honda and BMW et-al are going to leave?

No, I don't think they are.

[ColesCountyDem]

41. I'm not so sure.

Since their not domestically-owned, they could shut down at will, Senator.

[Sen. Walter Sobchak]

45. So us Americans are going to stop driving?

Uhh... No.

[ColesCountyDem]

56. You want to depend on foreign-owned companies for critical national-defense industrial production?

This isn't just about cars, you know?

:eyes:

[primavera]

50. Does GM employ "millions"?

Please do correct me if I've got this wrong, but all I ever hear about in the news is about how GM is closing out their US plants and opening up production facilities in Mexico. It also sounds like foreign companies like Toyota, are, in fact, keeping their production facilities in the US. So, arguably, at least in terms of employment, aren't those companies that are keeping their factories in the US being more beneficial to the US economy than those who move their jobs offshore, no matter which nationality the company has?

[blue_onyx]

51. Part of the problem is our trade policies

gives companies the incentive to move to Mexico for cheap labor. Yes, foreign automakers have some plants here but, of course, the foreign companies locate in "right to work" states were they can avoid unions and pay low wages. I'm not sure what percentage of vehicles GM or Toyota build here but you seem to be assuming Toyota builds more here than the US auto companies do. Overall, I don't think that's true. Here's a list "Top American-Made" cars and the majority are from GM/Ford.

http://www.cars.com/go/advice/Story.jsp?section=top&subject=ami&story=amMade0808&referer=&aff=national


Another point....we are forcing GM to move production plants out of the US because we place the burden of providing health care on them. More vehicles are produced across the Detroit River in Canada than in Michigan now because Canada provides health care for its citizens.

The economy of my state, particularly my area, is dependent on the US auto company so "in terms of employment" supporting the US automakers is the best interest of my state.

[primavera]

55. Thanks for the info

I honestly don't know whether foreign car manufacturers hire more US workers than American car companies, I'm just conscious that calling a company "American" doesn't necessarily mean very much if it's just a label. If a so-called "American" company were to only manufacture outside the US, it wouldn't matter very much to me anymore what they called themselves or why; for whatever reason, they would not be benefiting our economy. Conversely, if other so-called "foreign" companies were creating jobs and paying taxes and observing US labor and environmental laws and so on, those companies would be more actively benefitting the US economy than the allegedly "American" companies were. But again, I honestly don't know what the breakdown is or what percentage of their jobs companies like GM are moving offshore. Thanks again for the information!

[snooper2]

53. Apparently tax incentives are not good enough any more from the South

As Toyota has to spend too much time and money to train people- so they are moving North to find more edumacated 'Mericans :rofl: :rofl: :rofl:

[AndyTiedye]

22. But There Isn't. Chapter 11 = Screw the UAW

[Sen. Walter Sobchak]

27. their already screwed - they work for a dying corporation

[ColesCountyDem]

32. Exactly.

One thing the Obama administration could do to protect the UAW would be to enact AND fund legislation that would protect unions whose employers go into bankruptcy, then force the automakers into bankruptcy once the ink is dry on the legislation.

[blue_onyx]

35. That won't happen

If it did, Obama would likely kiss Michigan's (and probably Ohio's and Indiana's) electoral votes goodbye come 2012. The loss of these companies would devastate this region. Yeah, legislation would protect the pensions but what about the people who are too young to retire? Where are they going to work when the auto companies are gone? What about the people whose jobs indirectly benefit from the auto industry (restaurants, stores, etc)? Pushing the companies into bankruptcy is the wrong decision and I don't think Obama will do it.

[ColesCountyDem]

37. Chapter 11 is quite different than Chapter 7.

Chapter 11 envisions a realistic plan of putting the company back on the road to economic health, not liquidating its assets to pay off creditors. Therefore, if Obama succeeded in helping BOTH the companies and the unions, I wager he'd carry MI, OH and IN in landslides in 2012.

:)

[blue_onyx]

40. The post you replied to said

the company was dying so I thought you were advocating for chapter 7. Just a misunderstanding. :)

I still don't think bankruptcy is the best option. Polls show people won't buy from a bankrupt auto company. I know airlines have survived bankruptcy but it's different because buying a car is a $20,000 investment, not a $200 investment. Finding a way to get the auto companies on track, without bankruptcy, is the best option.

[ColesCountyDem]

42. I've actually done several Chapter 11 business bankruptcies, and...

... I'm not sure the polls are valid. There's an initial, brief negative reaction, but the customers return shortly and the business itself makes some badly needed changes to machinery, loans, management, etc. and is usually a much stronger company when it emerges from Chapter 11.

:)

[Odin2005]

49. I agree completely.

The problem is, as you said, that it would be used to go after the unions and pensioners. I don't know what the answer is, we are in economic uncharted territory. Despite what some say I think GM is still very much a viable company if they are giving the right management, IMO the "what some say" is just thinly veiled BS bashing of domestic cars.

[high density]

28. I have a problem with money going to Chrysler

I know the jobs are on the line, but fact is this company is a private equity gamble gone bad. The product line of the company is generally ancient and it seems bailout money is just delaying the inevitable.

GM made plenty of bad decisions of their own (e.g. expanding the Hummer brand) but they seem to at least be putting a little effort into improving their product offering.

[Mr. Hyde]

46. People can't afford to buy new cars. Giving money to car makers won't change that. nt

[JCMach1]

48. I want to know what is up with AP? Two very different stories from them today...

:wtf:

[fascisthunter]

54. .