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AUTOMAKERS' CRISIS * USA - Day One of Round Two
* Wagoner admits to 'Plan B:' Bankruptcy
Detroit MICH,USA -The Detroit News, by Daniel Howes -December 5, 2008: -- The chairman of the Senate Banking Committee , Chris Dodd, D-Conn., got it right Thursday: "We're looking at a death sentence here if we don't respond intelligently and prudently" ... Day One of Round Two in Detroit's automakers go to Washington may have been blessedly light on cheap political theatrics. But it was heavy on the preliminary what-if deal-making that could determine whether General Motors Corp. and Chrysler LLC can wrest a combined $25 billion from Congress to make it past New Year's Day -- or not... This much is clear:
* GM, which says it needs $4 billion within days to keep funding operations, is the sick man of industrial America driving the lame-duck frenzy in Congress to find a solution. The alternative -- a rush into federal bankruptcy court -- would be even more economically devastating, experts told the committee...
* Second, an increasingly desperate GM does have "a Plan B," despite repeated claims by GM Chairman Rick Wagoner, that Chapter 11 bankruptcy filing is not a "viable option" for the No. 1 automaker. Oh, but it could be, Sen. Bob Corker, R-Tenn., learned by pressing Wagoner... If GM, the United Auto Workers and the automaker's bondholders failed by March 31 to rework GM's labor costs and restructure its debt-laden balance sheet -- two core goals of many bankruptcies -- would Wagoner agree to pay the loans back in full (from what?) or file for bankruptcy?...
GM-Chrysler deal revived : "Yes, I would," the GM CEO replied, with almost no hesitation. Bingo. Corker uses the specter of bankruptcy outside of bankruptcy to get a bankruptcy-like result -- a nice trick if the rest of Congress buys his logic (debatable) and if negotiations unspool as he envisions...
* Third, Chrysler almost certainly will not survive this shake-out and remain an independent automaker, a fact punctuated by the (not necessarily new) revelation that Chrysler's owner, Cerberus Capital Management LP, is not interested in pumping more money into the automaker; that Cerberus acquired Chrysler to access its captive finance company; that Cerberus is looking to foist Chrysler (or whatever assets it can) on a would-be partner...
* Auto aid deal dicey as Senate skeptics grill GM, Chrysler execs - Dems urge Bush to tap Wall Street rescue funds
Washington,DC,USA -The Detroit News, by Christine Tierney & David Shepardson -December 5, 2008: -- The chief executives of Detroit's automakers returned to Congress on Thursday offering new concessions in a desperate plea for emergency loans to keep their companies afloat but encountered fresh resistance from lawmakers... General Motors Corp. appeared to be facing the greatest peril as the CEOs of the Big Three left the Capitol no closer to obtaining the $34 billion they have requested... As hopes for congressional approval dimmed, House Speaker Nancy Pelosi, D-Calif., and Sen. Majority Leader Harry Reid, D-Nev., urged President George W. Bush late Thursday to tap the Wall Street rescue funds to help the automakers... The Detroit News has learned that the White House held discussions as recently as Wednesday among various Cabinet departments about how the administration could aid automakers in the event Congress cannot agree on providing funding, but Bush has not decided whether he would step in... One issue under discussion is whether the administration could shift some of the $700 billion Wall Street bailout money to automakers if Congress doesn't act to prevent their collapse... (Photo by Chip Somodevilla / Getty Images - GM CEO Rick Wagoner, left, UAW President Ron Gettelfinger, Ford CEO Alan Mulally and Chrysler CEO Robert Nardelli testify before the Senate Banking Committee on Thursday)* Chrysler's future as independent firm questioned
Washington,DC,USA -The Detroit News, by Alisa Priddle -December 5, 2008: -- Lawmakers put Chrysler LLC under a harsh spotlight Thursday, with several senators questioning the intentions and viability of the Auburn Hills automaker... One member of the Senate Banking Committee wondered if Congress was being asked to approve a bailout for the privately owned carmaker, or a dowry.
"You want to hang around long enough so you can date somebody and hopefully get married soon before you run out of money," Sen. Bob Corker, R-Tenn., told CEO Robert Nardelli... He said Chrysler's owner, private equity fund Cerberus Capital Management LP, did not seem to have a powerful commitment to Chrysler and noted that the carmaker already has been the subject of alliance and merger talks... Corker said he thought the smallest of Detroit's Big Three automakers was "getting ready to go bankrupt and then GM got into trouble," providing Chrysler a lifeline to attach its own request for $7 billion in aid. He also took issue with Chrysler asking for government money, saying it is in a different situation than General Motors Corp. and Ford Motor Co. because of its parentage. He described Chrysler as a "portfolio company in a private equity company with a lot of money and they are unwilling to invest in your company"... Cerberus has not ignored Chrysler's plight, however, Nardelli said, pointing to the $2 billion midyear cash infusion from its private owner...
* Comment: Big 3 car executives agree to take orders from Washington - Senators skeptical but open to $34 billion auto bailout
Washington,DC,USA -MarketWatch, by Rex Nutting -Dec. 4, 2008: -- Chastened leaders of the U.S. automobile industry agreed Thursday to accept strong oversight from Washington in return for the immediate government aid they say is needed to keep the industry alive past the new year... After sending more detailed restructuring plans to Congress earlier this week, top corporate executives from General Motors Corp., Ford Motor Co. and Chrysler LLC and the leader of the United Autoworkers union testified again to the committee Thursday about the companies' request for an urgent bailout totaling $34 billion... Top senators on the Senate Banking Committee were empathetic but wary of repeating the same mistakes they say they made when they handed hundreds of billions of dollars to banks without any strings attached. Refusing the auto industry is not an option, said Sen. Chris Dodd, D-Conn., chairman of the committee. Doing nothing would be playing "Russian roulette with the entire economy of the United States"... If the executives are persuasive enough during the two days of hearings this week, the House and Senate could schedule a vote next week. Passage in the House seems likely, but the vote in the Senate could be nail-biter, with approval by 60 of 100 senators needed... Two weeks ago, the same industry and union leaders strode into Washington expecting quick approval of the loans. However, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid told the companies that the lawmakers had no idea about what the companies would do with the money. The executives were told to go back to Detroit and return with a detailed plan... The Bush administration and congressional leaders have said they favor some assistance to the automakers, but differ over the source of the funds and over the small print... White House spokeswoman Dana Perino said it was too early to assess the companies' restructuring plans. She said the Bush administration continues to support giving the auto companies access to funds designated for energy efficiency...
Labels: automakers' crisis
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