Details are unavailable but there is word from Democratic Senator Levin’s office that a bipartisan deal has been reached to fund an automaker bailout. It appears the compromise will involve providing funds from the energy department that were earmarked for retooling.
It is also unclear if there would be enough support to get it passed.
Senators will be speaking to reporters at 2:30 PM EST.
Volt is go?
Source (Marketwatch)
Last night, the Senate canceled and essentially terminated any chance of getting GM, Ford, and Chrysler loans from the $700 billion Wall Street Bailout or TARP fund.
The last chance it seems for funding, and likely for survival, will be the slim possibility of both the Senate and the House of Representatives voting favorably, and Bush signing a new proposal being crafted by Michigan Senator Carl Levin. This could come as early as today.
This bill would authorize the immediate release of the $25 billion in retooling loans already approved for the Detroit automaker to be utilized instead for operations.
It is clear at this point that congressional Republicans as well as the Bush administration would be willing to sign that bill. Some senior Democrats however remained opposed, because they feel that money should only be utilized for the process of building more fuel efficient cars.
Levin said however “Are we going to permit a difference over the source of funds for these loans to destroy an opportunity to help an industry so essential to this economy?” A Democratic sweetener of extended jobless benefits could be added to the bill to help it pass.
GM continues to press on without any plans for bankruptcy despite the fact that they are likely teetering on insolvency and could fail at any moment. CEO Rick Wagoner said GM had looked at bankruptcy but felt it would be impossible because as soon as it happened, no-one would buy their products and thus they would have to “liquidate the company because you wouldn’t have any revenue.”
Source (Detroit Free Press) and (WSJ)
Today the CEOs of GM, Ford, and Chrysler, and the UAW president spent a second day testifying on Capitol Hill. This time before a House committee. They continued to plead their case of catastrophic national economic repercussions if they were allowed to fail.
In response, the CEOs were chided by congress for taking corporate jets to Washington, and only one of the three admitted willingness to accept $1 salary in exchange for aid. That same executive, Robert Nardelli of Chrysler, also admitted bankruptcy was an option strongly considered for his company but felt likely to fail. He admitted Chrysler only has about $6 billion left.
Rick Wagoner of GM wouldn’t state exactly how much time is left before GM will run out of money but when pressed by a congressman said “I don’t believe we have the luxury of a lot of time,” and “(in terms of an exact date) I can’t tell you that for certain.” He even conceded he would resign if required for the loans, but felt that was not the best solution.
Wagoner also express willingness to take the funds from the retooling loans, and indeed the Energy department stated it might be possible to get the automaker that money before the end of the year.
GM is asking for $10 to $12 billion of the $25 billion.
In the end, though, it seemed unlikely Detroit would get the money based on the governmental stalemate over the source of the funds, whether it be TARP or retooling loans, with Republicans favoring the latter.
Senator Chris Dodd, chairman of the banking committee, said chances of a resolution were “slim.” The congress is expected to break at the end of this week although could possibly reconvene in December.
It was just reported that Senate democrats have canceled voting on the bill that was planned for today. Instead Republican leaders are working on reworking the $25 billion in retooling loans, and a vote on that could occur tomorrow and may be tacked on to a bill extending jobless benefits.
The tension continues, and our Volt may very well hang in the balance.
Source (CNN)
Despite the intense pleas from GM, Ford, and Chrysler yesterday at the Senate Banking Committee, Washington’s reception to the automakers has been cool.
Reports indicate that the Senate will not have adequate votes to pass the legislation, and may not even vote on it. To the automakers Senator Dodd stated “You’re asking an awful lot, I’d like to tell you that in the next couple of days this is going to happen. I don’t think it is.”
Furthermore, Democrats continue to oppose the alternative proposal of allowing the $25 billion retooling loan to act as a bridge.
Each day GM’s financial status becomes more and more precarious, and November sales are reportedly as bad so far as October was. Both Chrysler and GM have indicated they will likely run out of cash by year end, and expect dire and widespread economic consequences if they do.
The automakers are expected to appear before a House committee today.
Source (AP)
Today the CEO’s of GM, Ford, and Chrysler testified before the Senate Banking Committee trying to secure aid for their respective companies. Present as well was the president of the autoworkers union.
GM’s CEO Rick Wagoner warned them apocalyptically “this is about much more than just Detroit. It’s about saving the U.S. economy from a catastrophic collapse.” He also promised the Volt in return for aid stating:
“We’ll use this bridge to pay for essential operations… new vehicles and powertrains… parts from our suppliers… wages and benefits for our workers and retirees… and taxes for state and local governments that help deliver essential services to million of Americans. In the process, we’ll continue to reinvent the automobile, and improve the nation’s energy security, through development of advanced technologies like those in the Chevy Volt.”
You can read all of Mr. Wagoner’s comments here.
UAW President Ron Gettelfinger also warned “If one of these companies goes into bankruptcy, I’d be willing to bet it takes two, or possibly all three, with them.”
Meanwhile it is looking like the bailout bill wont muster the necessary votes, when it goes to the Senate floor tomorrow.
Another possible approach, endorsed by the Bush administration, congressional Republicans, and an increasing amount of Democrats involves changing the rules of the previously approved $25 billion retooling loan.
This low interested loan was specifically to help the automakers to re-tool assembly plants for the sole purpose of being able to build more fuel-efficient vehicles and would be gradually metered out over 7 years. In the new approach the automakers could be given immediate access to that loan and be allowed to use it instead for operations (Detroit News)
It is widely believed that without aid GM may only have enough cash to survive until the end of this year.
As the US automotive financial crisis continues, and the US government debates whether to bail out GM and the other automakers, foreign governments are apparently developing their own plans.
Just reported in a leading Chinese newspaper is a report that Chinese automakers SAIC and Donfeng have developed internal plans to buy GM and Chrysler assets.
Considering GM’s very low current market cap of less than $2 billion, if they are willing to accept the debt, such an acquisition would be easy for China’s government-owned automakers.
Since the Chinese automotive market has the greatest global growth potential and Chinese automakers have been looking for ways to achieve international leverage, this could be a quick solution for them.
Will our Volts be made in China? It may be up to our government to decide.
Source (The Truth About Cars )
Thanks to Dave M. for the tip.
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