
The devil continues to be in the details of the democrat-written bill that will use government funds to allow GM and Chrysler to survive until next March. A draft was presented by the top Democrats to the White House on Monday night.
The bill will be called the Auto Industry Financing and Restructuring Act, and a draft copy has leaked into the press.
One thing that appears to be final is the amount, $15 billion, which will go to the automakers out of the retooling fund already appropriated.
It calls for the creation of a single individual to be appointed by Bush and so-called the car czar. That person will oversee and help negotiate the restructuring effort and be able to review any expenditure of greater than $25 million.
The bill also calls for the government to receive stock in the automakers worth 20% of the loans, and limits executive compensation. There’s even a clause requiring a study as to whether the automakers could build transit vehicles.
Nancy Pelosi when speaking about the bill late Monday said “We call this a barbershop. Everyone is getting haircuts, in terms of the conditions,” referring to the shaving of dollars owed to them by creditors as well as contract guarantees from the autoworkers.
The White House has expressed concern that the bill inst tough enough on the automakers. There are fears that it may not offer taxpayers enough protection and may allow companies that cannot demonstrate long-term viability to still get loans. Since loans could be given up until March 31 it might not be possible for GM to show that it has achieved sufficient restructuring by that date. Think about how long it might realistically take to sell Saab or shut down Saturn for example.
Outspoken Senate Finance Committee member Bob Corker noted that the bill “lacked teeth” and should accomplish the same thing as bankruptcy would only without the detrimental stigma. As it stands, he said he wouldn’t support the bill.
Negotiations on the draft are to continue with the hope that a vote could be taken as early as Wednesday, but whether it can avoid a Senate filibuster is still far from clear. It still remains possible that the auto companies will not get government loans.
Source (Wall Street Journal)








