Bailout Draft sent to White House

Late this afternoon, Congressional Democrats sent the White House a draft of a roughly $15 billion auto bailout. The draft stipulates a "car czar" who is appointed by the President and is responsible for the oversight of these loans. The draft bill has other conditions, such as limits on executive compensation and a prohibition against shareholder dividends while the loans are pending. The bill also prohibits loan recipients from challenging state greenhouse gas emissions rules. Apparently, there are no deal breakers in this initial draft and we should have a vote before the end of the week.

More from Automotive News:

"Negotiations continued Monday night on legislation that would provide an estimated $15 billion in emergency federal loans to General Motors and Chrysler LLC.

Although differences remained between Democratic leaders of Congress and the White House, no issue emerged as an obvious deal-breaker.

"I'm very encouraged," House Speaker Nancy Pelosi, D-Calif., said in a late-afternoon briefing for reporters."

Of course, nothing happens very fast in Washington, so we will have to wait and see if the Senate can get the 60 votes it needs to overcome any filibuster effort.

GM concessions, Detroit 3 needs 34 billion

Well, we are getting info today at breakneck pace, as expected. First, let's have a look at some of the concessions and/or plans that GM is proferring to Congress:

From Automotive News:

"...GM will focus on its "core brands" of Chevrolet, Buick, GMC and Cadillac, the plan says. GM will sell Saab, shrink Pontiac to a niche brand and consider selling or closing Saturn, GM President Fritz Henderson told reporters at a briefing today.

GM also plans to trim its U.S. dealerships from today's 6,450 to about 4,700, Henderson said. It will cut about one-third of the nameplates from its vehicle lineup.

In the starkest acknowledgement GM has made of its financial condition, the company says it needs $4 billion in federal aid by the end of the month.

GM's plan asks Congress for $12 billion in loans by the end of March. It seeks another $6 billion in revolving credit if market conditions don't turn around.

Henderson said GM will seek a buyer for Saab. Pontiac will be shrunk to a "specialty, niche" brand, Henderson said. GM already has put Hummer up for sale.

Under its franchise agreement with Saturn dealers, GM will seek a new course for that brand, Henderson said. Asked whether GM would sell or fold Saturn, he said he would not eliminate any options.

Trimming GM's 6,450 U.S. dealerships to about 4,700.

Reopening talks with the UAW to cut manufacturing costs further."

Poor Saturn. Looks like they are history. The other thing that jumps out at me is GM's pressing need for 4 billion by the end of the month! WOW, where did that come from? Let's keep going and see what the new loan tally is.

From Automotive News:

"The Detroit 3 today increased their appeals for federal loans beyond the $25 billion requested in November.

General Motors, Ford Motor Co. and Chrysler LLC together are asking Congress to approve loans and credit lines that total $34 billion. The Detroit 3 submitted their business plans to lawmakers today.

House Speaker Nancy Pelosi said automakers will get help. "An intervention will happen," she said at a Washington news conference. Echoing industry leaders, the California Democrat said bankruptcy is not an option for any of the companies."

That is a pretty serious inflation rate, dontcha think? From 25 to 34 billion in a matter of weeks. Wow,

AND FINALLY, who does Nancy Pelosi think she is? The Prime Minister? The Shah? The Royal Grand Poobah? She obviously thinks that she controls the entire Congress. What a head job.

I think Ford and GM have submitted good plans. I just wish we had some assurances that they will stick to them!

What's Next for the Big 3

Well, let's take a look at the highlights of the bill that Congress is dangling for the US automakers. The main stipulation is that the Big Three must submit their plans for using the money and what they will do in the future. Here are the highlights, bulleted from Green Car Congress:

• The Secretary of Commerce is to establish a program to provide up to $25 billion in direct loans to automobile manufacturers and component suppliers whose failure would have a systemic adverse effect on the overall economy.

• Any costs of the loans would be covered by funds previously appropriated for auto industry retooling loans under Section 136 of the Energy Independence and Security Act of 2007 (P.L. 110-140).

• Loan repayments and proceeds from the sale of company stock will be used to replenish funding for Section 136.

• Loan recipients must detail how they would use the funds to ensure their long-term financial viability and improve their ability to produce energy-efficient, advanced technology vehicles. Requires cost control measures and performance goals and milestones.

• Establishes an Oversight Board comprising the Secretary of Commerce, Secretary of Energy, Secretary of Transportation, Secretary of Treasury, Secretary of Labor and the Administrator of the Environmental Protection Agency. The Board will review and provide advice, and recommend changes, as necessary, for meeting the goals and milestones under the Financial Viability Plan. The Board also has authority to review significant company transactions (e.g., asset sales or investments valued at more than $25 million) and to give direction to the company with respect to such transactions.

• The government gets an equity stake in firms that get loans.

• Prohibits firms who receive loans from paying dividends to common stockholders for the duration of the loan.

• The companies will be charged 5% interest for the first 5 years and then 9% interest after that.

• Requires companies that receive the loans to place limits on executive compensation, including prohibiting golden parachutes. In addition to all of the limits placed on EESA beneficiaries, prohibits bonuses to executives whose base pay exceeds $250,000 annually.

The so-called Detroit 3 have until December 2nd to return with their plans. If you are interested, this is formally called the Auto Industry Emergency Bridge Loan Act.

In other news, Nancy Pelosi said that Congress' tough stance against the automakers was "good news". Apparently, she thought their performance this week in front of the House and Senate was not nearly enough and this now gives them another opportunity to prove themselves. Whatever Nancy.

Nancy Pelosi and Harry Reid block US Automaker bailout

In a sickening twist, the two Congressional leaders blocked any bailout efforts until the Big Three submit their plans for the future and outline how they will use the money. You wanna talk about grandstanding, Pelosi is acting like she is the queen bee who is gonna force the automakers into submission. I feel like she is treating the Big Three like they are little children who need to write sentences until they learn their lesson. Here is a quote from Pelosi (whom I dislike more each day):

"Until they show us a plan, we can't show them the money."

This from the person who just pushed through the unprecedented 700 billion dollar banking bailout. So our government will not LOAN 25 billion to our auto companies but will readily SPEND 700 billion on evil, reckless banking institutions? It reminds me of a bible verse that describes hypocrites who can swallow a camel but strain at a gnat.

I am afraid if I were the CEO of GM, Ford or Chrysler, I would tell Nancy Pelosi and Harry Reid to stick it where the sun don't shine. This, of course, explains why I am not!

What happens today in Congress?

Today is a big day in the United States for the auto industry. We have seen fierce lobbying from all sides this weekend for and against any Federal bailout. The White House is saying that the 25 billion earmarked for "re-tooling" the automakers in order to make more fuel efficient hybrids should now be used instead as immediate emergency funds. Nancy Pelosi disagrees and wants to sap some funds from TARP, which of course, was originally designated for the banking bailout. What a mess.

Barack Obama appeared on 60 minutes yesterday and had this to say, ""We need to provide assistance,...But I think that it can't be a blank check.''

Sorry Barack, but every time Congress creates any buyout like this, it winds up being a blank check for someone.

As soon as I hear any news about today's Congressional hearings concerning the blighted US automakers, I will post ASAP.

US Lawmakers at it again!

From the Wall Street Journal online:

"House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid sent a letter to Treasury Secretary Henry Paulson urging him to assist the Big Three auto makers by considering broadening the $700 billion Troubled Asset Relief Program to help the troubled (auto) industry."

Hmmm. I didn't know the Treasury Secretary had such broad powers, did you? The more I learn of Nancy Pelosi's legislative prowess (or glaring lack thereof), the less I like her. This is yet another bone-headed initiative spearheaded by Pelosi. Lest I digress further into oblivion, let's shift gears.

Where do the handout's end? Exacty how many billions of dollars is enough to assuage the greedy, insatiable executives of the Big Three US automakers? The recent 25 billion dollar "loan" is apparently not even enough to qualify as a tiny Band-aid. I have heard rumours of a 50 billion dollar package recently and now this announcement of unknown proportions gives me tremendous pause. Does NASA even get this much money?

Apparently, we are going to bail out these worthless companies, who squandered big profits when times were good and the SUV's and trucks rolled off the production line, but why can't we attach some strings to these handouts? Here are three ideas I have:

1. All upper management is relieved of duties within 30 days.
2. Fleet mpg AVERAGES must be 35 or greater.
3. Alternative fuel vehicles must be offered and each automaker must have a CNG, PHEV AND EV model for sale.

I realize that we are in some financial hard times at the moment, but I truly believe that foreign oil dependency is killing us. We must turn this ship around and stop the madness of driving around in gas guzzling vehicles while importing foreign oil.