GM Spirals the Drain (Part 2)

[Naked Gents Rut]

The New York Times is saying the bailout is dead.

[Asher]

[snoopy369]

Originally posted by DanS
The New York Times is saying the bailout is dead. It probably still has a faint pulse, though.



http://www.nytimes.com/2008/12/12/bu...ef=automobiles

[DanS]

General Motors Corp. has hired lawyers and bankers to consider whether to file for bankruptcy protection, said several people familiar with the matter, while Senate lawmakers embarked on a last-ditch effort to break an impasse on Congress's auto-bailout package.

GM management recently tapped bankruptcy veteran Harvey Miller of the New York law firm, Weil Gotshal & Manges LP, to handle what would be one of the largest and most controversial filings in U.S. history. Others involved in the matter include restructuring veterans Jay Alix, Evercore Partners' William Repko and Blackstone Group's Arthur Newman.

http://online.wsj.com/article/SB122903816924599853.html?mod=testMod

[KrazyHorse]

YESSSSS

[Dinner]

[Darius871]

Originally posted by DanS
The New York Times is saying the bailout is dead.

Deus vult!

[CrONoS]

Does American airlines company received bailout in the past?

If yes; Does any studies or analysis were made ?

Does managers were more risk takers after bailout? Does Manager wage increased? What about efficiency of company?
Etc..

[Dinner]

The government of Sweden passes an auto bailout package designed to help Volvo and Saab. Volvo is owned by Ford and Saab is owned by GM.

http://news.bbc.co.uk/2/hi/business/7777395.stm

The Swedish bailout gives $3.5 billion to Swedish automakers.

[Dinner]

"Republicans were demanding upfront concessions from the United Auto Workers as the price for the support needed for passage. It wasn't clear what, if any, concessions the union was willing to discuss."

http://www.foxnews.com/politics/2008/12/11/reid-white-house-make-final-pleas-passage-billion-auto-bailout/

The UAW did get rid of the jobs bank last week without GM making any other concessions. I'd say this bailout is still very much alive and, just like the bank bailout, Republicans are just angling for more pork in exchange for support. They love to make grandstanding speeches but their real goal is always pork.

BTW I found this quote interesting (from the same link):

"Corker also proposed making bondholders and unions take stock in the Big Three in place of some cash payments they're owed. Plus he wanted autoworkers to renegotiate their contracts and adjust their pay and benefits to match what foreign automakers pay their workers in the U.S. "

[Dinner]

One dispute holding up Senate deal on bailout
GOP members had demanded concessions from United Auto Workers

BREAKING NEWS
updated 10 minutes ago

WASHINGTON - Officials say Republican and Democratic senators are struggling to resolve one last dispute standing in the way of an emergency bailout for U.S. automakers.

The top Senate Democrat says the compromise could see a vote tonight. Majority Leader Harry Reid says the lead Republican architect of the deal is briefing colleagues on its outlines, and Democrats were prepared to move forward on it quickly.

His announcement came after hours of marathon talks at the Capitol between labor, lawmakers and the auto industry to salvage the Big Three rescue. The talks centered on wage and benefit concessions from the United Auto Workers union as well as debt restructuring by General Motors, Ford and Chrysler.

It wasn't immediately clear what was standing in the way of a final agreement.

"All issues are still on the table," said Sen. Dick Durbin, the No. 2 Democrat, as he emerged from the talks.

But it was clear lawmakers had made substantial progress toward getting the auto industry aid back on track, and members of both parties were in search of an accord.

Sen. Chris Dodd, a Democrat and the Banking Committee chairman, who was his party's point man, said staff aides were working on legislative language of a still-emerging deal.

"While we've reached some agreement on a lot already, there are issues that are still outstanding," Dodd said.

Progress in the negotiations were the latest development in a long-running debate over bailing out the beleaguered auto industry. The issue gained urgency last week when the government reported the economy had lost more than a half-million jobs in November, the most in any month for more than 30 years.

It was unclear how far the participants were willing to go to seal the federal aid that General Motors and Chrysler said was essential to keep them from bankruptcy. Ford is in better financial shape than its rivals, although its survival is not assured, either.

bailout The highlights
Key points of bailout legislation for the Detroit-based U.S. automobile manufacturers:
Loans
$14 billion in low-interest loans made available to General Motors Corp., Chrysler LLC and Ford Motor Co. GM and Chrysler are expected to apply for loans. Ford says it will not.
Restructuring plans
Companies receiving taxpayer assistance must develop plans by March 31, 2009 to restructure their businesses into viable enterprises. Failure to do so would require repayment of the loans within 30 days.
Car "czar"
President Bush will name a so-called car czar to facilitate negotiations among stakeholders such as the companies, the United Auto Workers Union, creditors, retirees, suppliers and automobile dealers to develop long-term plan for viability.
Taxpayer protections
Taxpayers would be first in line to be paid back — ahead of other creditors. The United States government would have the right to purchase non-voting shares in the companies.
Source: Associated Press • Print this

The developments unfolded after Senate Republican leader Mitch McConnell joined other party lawmakers in announcing his opposition to a White House-backed rescue bill that was approved by the House a day earlier. He called for an alternative that would reduce the wages and benefits of U.S. autoworkers to bring them in line with those paid by Japanese carmakers Nissan, Toyota and Honda in the United States.

Sen. Bob Corker of Tennessee took a leading role in the closed-door talks for Republicans.

"The meetings have gone very well," he said as he ducked out at one point. "We've got some issues to work out."

When he re-entered the talks a short while later, industry representatives had departed, leaving only the autoworker union and lawmakers.

http://www.msnbc.msn.com/id/28166218/

It seems the bailout could indeed be alive and while provided the UAW makes some more concessions. Like I said they have recently given up the jobs banks so they have given ground and will likely give more.

[Dinner]

The last news tonight isn't good for the automakers. Republicans are demanding the UAW immediately slash wages and benefits before any bailout is approved. The UAW has responded that they will allow this to occur but only after 2011 if the Big 3 finish make good on the other two payments to the pension fund and the retiree health care fund.

We'll see what happens with the final horse trading. I suspect in the end some deal will be worked out it just depends on how much pork Republicans will demand before they finally do the right thing.

BTW Sen Corker's plan (R-TN) seem fair.

Corker has crafted a separate, three-pronged plan:

* It would require the two firms closest to bankruptcy, General Motors and Chrysler, to reduce their debt by two-thirds. Bondholders would have “plenty of incentive to make sure that the debt is reduced by two-thirds” or risk losing even more if the firms go into Chapter 11, where their bonds might be further discounted, Corker said. “We’re going to force them into bankruptcy if they don’t do this,” he said bluntly.
* He also would require that the Voluntary Employee Benefit Association, the entity created by the car firms and the UAW to handle retiree health care benefits, accept stock in lieu of half the cash payments due. The carmakers had agreed to fund VEBA but can no longer afford to do so. “If a company goes bankrupt, these future payments are never going to happen anyway,” he said.
* Finally, Corker’s bill would force the UAW to lower its members’ wages to the level of workers at the American “transplants,” the factories in Tennessee and other states owned by Toyota, Hyundai and other foreign car companies.

http://www.msnbc.msn.com/id/28179431/

[Darius871]

Why have you now twice referred to these demands for across-the-board UAW concessions as "pork"? Do you even know what pork means?

[Dinner]

I haven't Darius. I have said Republicans will end up voting for the bailout in exchange for pork just like they did with the Wall St bailout. Do you have any idea how much pork Republicans larded up on that bill? The wrangled tens of billions in ear marks for their home districts as "sweeteners" to get their guys to pass the bill.

I strongly suspect they will do the same with the auto bailout as they did with the Wall St bailout. Namely, do a lot of posturing and then vote for it in exchange for pork they can take home to their districts. That's always their end goal.

[Darius871]

It wouldn't surprise me if pork ends up on this bill, but what is this UAW demand then? Are you saying it's mere pretext that they'll ultimately forego in exchange for pork? This demand is more concrete and specific than their vague "grandstanding speeches" about free-market ideology that we saw with their stalling the Wall St. bailout, so to suddenly give up UAW concessions now would be pretty blatant. It sounds like a very real condition for that reason, even if some pork gets piled on top of it.