Chrysler, LLC Gets Their Billions

They were supposed to get the funds before the end of the year but better late than never works just as well. Chrysler received their initial $4 Billion loan today from the US Government.

From Automotive News:

Chrysler LLC today received an initial $4 billion emergency loan from the U.S. government, two days after the government completed a parallel payout to its larger rival General Motors.

"This initial loan will allow the company to continue an orderly restructuring," Chrysler CEO Bob Nardelli said in a statement.

U.S. Treasury Department spokeswoman Brookly McLaughlin confirmed that the government had sent the $4 billion in funds to Chrysler today.

GM received $4 billion in emergency loans on Wednesday. Both Chrysler and GM have said they need the infusion of government cash to meet payouts to suppliers at a time when a plunge in auto sales has drained their cash holdings.

Officials have not spelled out why the loan to GM and a separate $6 billion funding for its affiliated finance firm GMAC were completed ahead of the Chrysler transaction.

In an email to employees, Nardelli suggested that the complexity of the deals had delayed the first payout to Chrysler, which had been expected to be completed before the end of the year.

"The Treasury Department has been working to complete the multiple, complex financial arrangements quickly and sequentially. The magnitude of these discussions was significant," Nardelli said.

When major automakers release results on Monday, December auto sales are expected to show that industry-wide sales fell to the lowest full-year level since 1992.

Under terms of the government bailout, Chrysler and GM will have to submit restructuring plans by mid-February and demonstrate that they are viable by the end of March.

Chrysler is controlled by Cerberus Capital Management LP, and as the only privately held of the Detroit-based automakers it faced the most scrutiny in congressional hearings on the proposed bailout for the industry.

Cerberus also owns 51 percent of GMAC.

The Bush administration approved a $17.4 billion bailout for the auto operations of GM and Chrysler in December.

Of that total, GM has been promised another $9.4 billion in government loans under that program in addition to the $4 billion payment made on Wednesday. The final $4 billion of the bailout approved for GM will require Congress to approve the funding.

Chrysler was given $4 billion by the U.S. government after asking for $7 billon.

The bailout represents the second U.S. government rescue of Chrysler in 28 years.

Rival Ford Motor Co has not sought government loans but has asked for a $9 billion line of credit it could tap if business conditions worsen beyond its projections.

White House Authorizes 13.4 Billion to US Automakers

Finally.

President Bush has just announced that the embattled US automakers will receive 13.4 billion in loans from the Government. That sure is a peculiar number.

President Bush made the announcement this morning at 9 am. Bush also stated that 4 billion more may be used in February 2009.

"The terms and conditions of the financing provided by the Treasury Department will facilitate restructuring of our domestic auto industry, prevent disorderly bankruptcies during a time of economic difficulty, and protect the taxpayer by ensuring that only financially viable firms receive financing," according to a statement released by the White House.

The White House calculated this amount should stabilize the automakers through the end of March 2009.

"If the firms have not attained viability by March 31, 2009, the loan will be called and all funds returned to the Treasury," the statement says.

The funds will come from the TARP bailout, as expected and there are other conditions to these funds. These include limits on executive compensation and perks such as corporate jets, the automakers adhering to fuel efficiency and emission standards and opening books to government scrutiny.

Finally.

Now can we resume our wonderful Holiday Season, already in progress?

Chrysler to shut down production as sales plummet

As promised, an expansion of the earlier report.

From Automotive News:

"The shutdown affects 30 plants, including all assembly, powertrain, component and stamping operations. The company has 46,000 hourly workers, most of them in the United States, Canada and Mexico, a spokesperson said.

Chrysler had already planned to extend its normal holiday shutdown, which was slated to run from Dec. 24 through Jan. 2, to include Dec. 22 and 23. That means Chrysler will drop an additional two weeks of production if workers return on Jan. 19.

Chrysler's U.S. sales have fallen 27.7 percent so far this year. The decline steepened this fall as credit markets tightened. Chrysler sales fell 47.1 percent in November, the biggest drop of any carmaker.

Chrysler joined General Motors and Ford Motor Co. in pleading for a financial bailout in Washington. Chrysler asked for a $7 billion bridge loan. Chairman Bob Nardelli told lawmakers the company could run out of money in the first quarter of 2009 without the loan. The fate of the bailout is in the White House hands after it failed to clear the Senate last week.

Nardelli told Congress the company would end 2008 with $2.5 billion cash on hand. He said the company will owe suppliers $8.0 billion in the first quarter alone. That accounts for the lion's share of Chrysler's estimated $9.4 billion in first-quarter expenditures, he said in testimony. He said Chrysler burned through $1 billion a month in the third quarter.

In a recent meeting at corporate headquarters, members of Chrysler's dealer council said lack of consumer credit is stifling sales.

"Chrysler dealers confirmed to the company at a recent meeting at its headquarters, that they have many willing buyers for Chrysler, Jeep and Dodge vehicles but are unable to close the deals, due to lack of financing," said a Chrysler statement. By Dec. 31, Chrysler will have slashed its workforce by 32,000 since its restructuring started in February 2007. That includes 5,000 white-collar employees who took buyout and early retirement packages Nov. 26. As part of the restructuring, Chrysler has cut 12 factory shifts, taking out 1.2 million units of annual production -- 30 percent of its total production."

Chrysler Will halt production for one month

Breaking News:

Chrysler LLC is shutting down all of its North American factories for a month due to the ongoing credit crisis and plunging sales. Chrysler announced today that all plants will be idled at the end of production Friday, Dec. 19. Employees will not return to work any sooner than Jan. 19.

Chrysler has maintained that without Government assistance it would be on the brink of collapse and now we have solid proof of their claims. Imagine the impact upon the thousands and thousands of families who will be hit hard over this Holiday season.

I will post more as it becomes available.

President Bush says auto bailout not quite ready

President Bush was en route to visit Afghan President Hamid Karzai and address U.S. troops in Afghanistan when he was asked about the US auto bailout. "We're not quite ready to announce that yet," Bush told reporters on Air Force One. Bush was then asked if the bailout would come from the 700 billion dollar TARP fund and he said, "I signaled that that's a possibility." He also stated that a decision would not take long although spokesperson Dana Perino said there was no timetable for assistance to the Big three.

More quotes from Yahoo News:

"An abrupt bankruptcy for autos could be devastating for the economy," Bush told reporters aboard Air Force One during an unannounced trip to Iraq and Afghanistan. "We're now in the process of working with the stakeholders on a way forward. We're not quite ready to announce that yet."

Bush wouldn't give a precise timetable but said, "This will not be a long process because of the economic fragility of the autos."

Looks like everyone will have to bite their nails for yet another day.

Bush Administration taking time to get it right.

The White House announced Friday that it would give aid to the distressed automakers but is going to take its time in order to get the package just right. They are meeting with the Big Three and trying to determine the amount of the loan as well as stipulations on its use. Look for an announcement on Monday of the details of this bailout.

From Automotive News:

Administration officials were gathering financial information from the automakers and assessing data such as their cash position, said Tony Fratto, a spokesman for President George W. Bush.

"We'll be focused on trying to get the policy right while considering the best interests of the taxpayer and our economy, and we'll take the time we have available to do that right," Fratto said. "No decisions have been made."

White House considering use of TARP funds for Auto bailout

From the beginning, the White House was opposed to using any monies from the TARP fund for the auto industry but now, it seems they have changed course. The Bush administration wanted Congress to use the 25 billion that was approved for "re-tooling" the Big Three so that they would build more efficient vehicles. Unfortunately, Congress was dead set against that idea. So the next move was for Congress to pass new legislation that would give the automakers up to 34 billion in loans to avert bankruptcy. As we have seen, this number was reduced to 14 billion to see them through until the Obama administration could get in place. Now, in a shocking and stupefying move, a minority of Senate members have killed the 14 billion dollar bill.

These few Senators have decided they would rather micromanage the Detroit Three and tell them how to run their business and also dictate what union members should be paid. Instead of doing the right thing, these Senators have shirked their responsibility and are willing to see our economy sink to greater depths.

Make no mistake, the US auto companies will crash and burn without assistance and it could happen in a matter of weeks, which precludes Obama's team being of any help or consequence. If GM and Chrysler fail, then think of the jobs that will be lost, the companies that will fold and the impact it will have on our society and economy. I am reading every day of companies that announce massive layoffs like Bank of America, who announced today that 35,000 will lose thier jobs. Does Congress really want to see 500,000 more jobs lost from the auto industry?

Now, the only option left is the White House, who could carve out a small percentage of the monies from TARP and give it to the Big Three. TARP is the 700 billion dollar Troubled Asset Recovery Program which was really a bailout and FREE money given to evil, crooked banking institutions. Dana Perino correctly stated this morning, "A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time."

I incorrectly thought that our Congressional leaders would approve a bailout bill and now I think that the White House will provide funds for the auto industry. I just hope I am not incorrect once again!

Tell me what you think. Will the White House and Bush Administration save the day?

US Auto Bailout Dead, Now What?

Unbelievably, the UAW has refused wage concessions and now the bailout bill is dead in the Senate where it was defeated on a procedural vote. I can hardly believe it as I truly thought there would be some form of bailout. Now they are counting on President Bush to use funds from TARP, which doesn't seem likely. What a mess.

From Yahoo News:

"Their efforts in Congress squashed, U.S. automakers are depending upon a reluctant White House to quickly provide a multibillion lifeline to help them avoid imminent collapse.

General Motors Corp. and Chrysler LLC, which have said they could run out of cash within weeks, have few options left after the dramatic defeat in the Senate of a $14 billion bailout for the domestic auto industry.

Its demise late Thursday prompted immediate calls from lawmakers in both parties for the Bush administration to tap into the $700 billion Wall Street bailout to rescue the beleaguered auto industry. The bill failed after talks broke down over the refusal of the United Auto Workers union to meet Republican demands for aggressive wage reductions.

The Senate rejected the bailout 52-35 on a procedural vote — well short of the 60 required — after the talks fell apart.

"I dread looking at Wall Street," said Senate Majority Leader Harry Reid in anticipation of Friday's stock market reaction. "It's not going to be a pleasant sight."

Stock markets in Asia and Europe dropped sharply on Friday after getting word of the bailout's failure.

The Bush administration has repeatedly said the Wall Street bailout fund should not be used for emergency aid to the automakers because it was designed to restore stability to the financial sector. Following the vote, the White House said it was studying its options.

"Plan B is the president," said Sen. Carl Levin, D-Mich. House Speaker Nancy Pelosi said action by President George W. Bush was the "only viable option."

General Motors and Chrysler are in the most immediate danger while Ford Motor Co. has said it does not need federal help now, but could face collateral damage if one of its domestic rivals fell. With the economy in recession, the auto industry has struggled under the weight of lackluster sales and choked credit markets.

Detroit's carmakers employ nearly a quarter-million workers, and more than 730,000 others produce materials and parts for cars. If one of the automakers declared bankruptcy, some estimate as many as 3 million U.S. jobs could be lost next year.

The White House said it was disappointed by the vote and the legislation "presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable."

Many congressional Republicans and some economists said the companies would be best to pursue a prearranged bankruptcy that would allow them to restructure quickly. But most Democrats and the carmakers rejected that, arguing it would quickly lead to liquidation because consumers would never buy cars from a bankrupt auto company.

As it lobbied unsuccessfully on Thursday, White House officials said the weak economy couldn't afford the collapse of the auto industry. President-elect Barack Obama said an industry shutdown would have a "devastating ripple effect" on the already battered economy."

Future of Auto bailout bill uncertain

As we saw yesterday, the House of Representatives passed their portion of the auto bailout bill but now it seems to be hung up in the Senate. George Voinovich, Sen - R Ohio, has already stated that there is not enough support in the Senate for passage. They need 60 votes to overcome any Republican delays and do not have it yet. The Republicans are spouting off that they are uncomfortable with the car czar, uncomfortable with spending 14 billion without the auto manufacturers having a clear plan and do want to see tougher environmental issues as part of the bill. I think these Republicans are just grandstanding, thinking they are protecting the taxpayer when in reality, they are accomplishing just the opposite.

From Yahoo News:

"A House-passed bill to speed $14 billion in loans to Detroit's automakers stands on shaky ground in a bailout-weary Congress, undermined by Republican opposition that could derail the emergency aid in the Senate.

Republicans are challenging lame-duck President George W. Bush on the proposal, arguing that any support for the domestic auto industry should carry significant concessions from autoworkers and creditors and reject tougher environmental rules imposed by House Democrats.

The House approved the plan late Wednesday on a vote of 237-170. It would infuse money within days into cash-starved General Motors Corp. and Chrysler LLC. Ford Motor Co., which has said it has enough cash to make it through 2009, would also be eligible for federal aid.

Supporters cited dire warnings from GM and Chrysler executives, who have said they could run out of cash within weeks, and concerns that a carmaker collapse would erase tens of thousands of jobs and jolt an already bleak economy.

Democrats and the Bush White House hoped the Senate would vote on the legislation as early as Thursday. But based on concerns raised by GOP senators — and a still-uncertain level of support even among Democrats — they had a lot of work to do.

A leading Senate Republican opponent said Thursday that he cannot back spending $14 billion of taxpayer money on a plan that would call for a restructuring of the industry, but which fails to detail just how that would be accomplished.

"I think that is putting the cart before the horse and isn't reponsible in terms of tax dollars," Sen. David Vitter of Louisiana said on CBS's "The Early Show."

"A lot of members of the Senate have questions, on both sides of the aisle, about the strength of the so-called auto czar," he said on CNN Thursday morning. "We think this auto czar will have very strong, sweeping powers, and we think that's reflected in the legislation. So we're going to keep talking to them (senators). The president and other members of the administration will be reaching out to Republican senators this morning."

Let's hope that our political system can actually work and that our representatives reach across the aisle and come to an amicable agreement.

Politicians at it again, Auto Bailout Delayed

Well, I should have seen this coming. Instead of quickly agreeing to a mere 14 or 15 billion dollar bailout bill, our Democrats and Republicans cannot find common ground. Earlier, the White House and Democrats agreed in principal to a bailout plan, but now the Republicans are rearing their heads and refusing to sign off on the bill. We are not even sure if there will be a vote this week when originally we thought the President would have it on his desk before the weekend. This is a depressing setback.

From Automotive News:

"A final Senate vote on legislation that would provide emergency loans to the Detroit 3 may not come until this weekend, Senate Majority Leader Harry Reid warned today.

Reid, D-Nev., said some provisions of the bailout bill are being negotiated, but the main obstacle is resistance by Senate Republicans to an expedited vote.

Sen. Mitch McConnell of Kentucky, the GOP leader, responded that Republicans can't agree to quick consideration of legislation they have not seen.

An "agreement in principle" between congressional Democratic leaders and the Bush White House on provisions of the loan bill was reported late yesterday. The House may take up the bill today.

But Reid conceded that some items remain unresolved. He said it has been difficult to reconcile the desires of the Senate, the House, the Bush administration and the incoming Obama administration.

Reid confirmed that Sen. Joe Biden, D-Del., the vice president-elect, has agreed to vote on the measure if needed.

McConnell signaled potential stumbling blocks. He said the bill must require concessions from unionized Detroit 3 workers and must ensure that the automakers will be put on a path to long-term survival without more taxpayer money.

He also warned that Republicans will resist a provision in the bill that the car companies must drop litigation against state greenhouse gas rules."

It looks like there is still quite a bit of work to be done before the bill can be brought to a vote. Tell me what you think. Will we have a bill before the weekend? It looks doubtful to me!

We Have an Agreement! Auto Bailout now on Track

Late Tuesday night, the White House and Congressional leaders were able to come to terms in fabricating the so called Auto Bailout Bill. Actually, the bill will have a more formal name once it is presented in the House and Senate. This is very good news indeed and we can look for a vote as early as today (Wednesday). Most of the terms in the agreement are the same as we have already heard, that it will be 15 billion, there will be a car czar, no big bonuses for the CEO's, etc.

From Automotive News:

"The White House and congressional Democrats on Tuesday night reached an agreement in principle on a $15 billion proposal for bailing out U.S. automakers and forcing them to restructure or fail, officials said.

A Bush administration official and a Democratic leadership aide said the outline covered key points but final issues needed to be resolved and put in writing.

Democrats have arranged to have the House of Representatives vote on a bill as early as Wednesday and send it to the Senate for consideration.

..."Bipartisan hard work has paid off," said Democratic Sen. Carl Levin of Michigan whose home state headquarters General Motors, Ford Motor Co. and Chrysler LLC.

"I understand an agreement has been reached," Levin said in a statement.

The bailout is designed to allow GM and Chrysler to avert threatened bankruptcy through March with short-term loans. Ford Motor Co. is not requesting immediate help but would like a $9 billion line of credit in case its finances worsen.

The parties that negotiated the tentative deal agreed last week that the money would come from an Energy Department fund established in September to help Detroit make more fuel-efficient cars.

The administration official said the negotiators satisfied the key White House concern in the talks that companies receiving aid obtain the necessary concessions and make other changes to prove they can survive and compete.

In addition to providing loans, the proposal would force automakers to answer to a presidentially appointed trustee -- or "car czar" -- and make the government their biggest shareholder.

The overseer will have powers to shape a restructuring of the companies, withholding further loans if progress toward a turnaround stalled.

A major provision would permit the czar to recommend a bankruptcy restructuring if companies borrowing money fail to obtain the necessary concessions.

Some Republicans wanted some sort of bankruptcy option included as an incentive for labor and other stakeholders to agree on givebacks."

Stay tuned, as always. Hopefully we will have the results of the votes by the end of this week.

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 CEO, Rick Wagoner, may be asked to step down

Legislators have been working this weekend to craft legislation that would "bail out" The Detroit 3. It appears that the monies will come from a previously approved 25 billion dollar package that was earmarked for the re-tooling of manufacturing lines, enabling automakers to produce more green/hybrid vehicles. Yesterday we heard the first rumblings of the appointment of a "car Czar" that would be appointed as overseer of this new bailout. Whether or not this would materialize and who would be appointed remains to be seen.

The very latest news is interesting, to say the least. This lame duck session of Congress really wants to control the funds given to the US automakers as evidenced by the use of a car Czar but now some are calling for the removal of GM CEO, Rick Wagoner.

From the Wall Street Journal:

"Now that Congress appears to be moving forward with at least an initial injection of federal money for General Motors Corp. and Chrysler LLC, the two troubled auto makers are under pressure to push ahead with tough measures to change how they do business -- including the possible replacement of GM Chairman and Chief Executive Rick Wagoner.

Sen. Chris Dodd (D., Conn.), a key supporter of aid for Detroit, suggested Sunday that Mr. Wagoner should go as part of any broader bailout package. "I think you've got to consider new leadership," the senator said on CBS's "Face The Nation" talk show. "If you're going to restructure, you've got to bring in a new team to do this," he said. "I think [Mr. Wagoner] has to move on."

Folks, this is really strong medicine for GM to swallow. I applaud Senator Dodd for making this suggestion and I also believe that he is correct. What I cannot understand is the GM Board of Directors, who have stood by and silently watched this once proud company be reduced to rubble. They have remained mute on the sidelines, watching Rick Wagoner steer the company directly into the ground. To be honest, he should have been fired years ago. Making matters worse is the knowledge that Wagoner will not own or shoulder any responsibility for the company's failure. Wagoner says he will not step down and maintains the he needs to remain with the company to help them through this rough patch. Hogwash Rick.

Tell me what you think. Should Rick Wagoner remain CEO and help the ailing company through this transition into a leaner, more efficient corporation or should he step aside to let someone begin with a clean slate? Senator Dodd's suggestion may be ignored after all is said and done and Wagoner may be allowed to skate.