Automaker Loans Deferred to December and Will Only be Provided Based on Automakers Plans for Viability, GM Agrees
Congressional leaders from the House and Senate today gave a press conference on the how they plan to move forward with the Detroit 3 bailout.
The congressional leaders indicated they are unanimously committed to helping the automakers, in a non-partisan way, but not immediately, and on conditions.
The leaders said GM, Chrysler, and Ford would have to provide congress with detailed plans on how they would use loan money in order to achieve future financial viability, stability, and profitability.
Those plans have to be submitted by December 2nd and will be reviewed and decided upon by the Congress, with funds being issued immediately upon approval. Congress will reconvene for this after Thanksgiving.
There will be taxpayer protection and equity. The funds will come from the retooling loan provisions, but not take away from those loans. Instead the money will come from that fund called section 136 and what is left will still be used for retooling. Furthermore stock will be held by the government and when sold back to the automakers at a profit (hopefully), it will go back into those funds.
Lawmakers indicated there is a significant risk in delaying this, but stated that if there is an emergency prior to December 8th, Pauslon and the administration will have the authority to use the TARP funds to give an emergency infusion. Paulson and the Bush administration though have clearly stated they did not feel the TARP funds were appropriate for the automakers.
The plan also stipulates strong congressional oversight once the loans are made.
House Speaker Nancy Pelosi summarized the plan in the following way “Until we see the plan…we cannot show them the money.”
GM spokesperson Greg Martin has issued the following statement in response:
We appreciate the Congress’ recognition of the auto industry’s vital contribution to the nation’s economic strength and national security. We intend to deliver a plan to Congress that shows them a viable General Motors. We agree completely that there must be accountability to U.S. taxpayers for government support that enables automakers to continue their restructuring and to ensure a stronger, more competitive auto industry. We will continue to work vigorously with the Congress and the Administration during the next few weeks to address their concerns and to arrive at a solution that provides immediate aid to the auto industry.
This entry was posted on Thursday, November 20th, 2008 at 3:48 pm and is filed under Financial, Politics. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.