Chrysler & GM granted $17.4B in loans

[Y2K5SRT]

White House announces $17.4B loans for automakers - Business First of Louisville:

WASHINGTON -- President Bush today announced emergency federal aid to prevent the collapse of General Motors and Chrysler LLC.

The government will offer up to $17.4 billion in loans to the ailing U.S. automakers and expects General Motors and Chrysler LLC to access the money immediately, according to a senior administration official.

Some $13.4 billion will be made available in December and January from the $700 billion fund that was originally designed to rescue struggling financial institutions, the official said.
Allowing the companies to fail "would not be a responsible course of action," Bush said in a broadcast message from the White House.

Bush said conditions on the aid will be similar to those in the legislation that failed Congress last week, including concessions from management, labor, bondholders and others.

 

[aries]

It's good to see. I'd like to know what the consessions were though. Here's a letter I wrote to my congressman:

Congressman Sarbanes,

Hello Congressman Sarbanes, my name is . I'm writing you this letter to express my growing frustration and concern on how this economic crisis is being handled by our government. I have several areas I'd like to address.

First, the 700 billion dollar "rescue package" that was enacted. This plan, as it was described, was to alleviate the banks of bad debt by giving them large amounts of money so as to free up credit so they would be able to lend money to businesses and individuals. Apparently, this money was not used for this but instead used to pay dividends to stockholders, executive bonuses and to purchase other banks. One bank used 6 billion dollars to purchase a bank in China. Where was the oversight? Why were there no regulations on how this money was to be spent? Keep in mind that we gave that money to the very institutions and banks that are partly responsible for causing this mortgage crisis in the first place through there questionable lending practices and predatory lending.

Second, we gave billions to AIG, who promptly, the following week, went on a $400,000 company vacation. This "business meeting" included manicures, pedicures, massages and spa treatments all on the hard working American tax payers dime. This is truly outrageous that this was allowed to happen. Can I tell you Congressman, that I'm 35 years old and I have never had a manicure, pedicure or even a massage in my life, but apparently my tax money has been used to grant that to an undeserving, poorly run business. Once again, I ask, where was the oversight? Who was making sure this money went to the right places and being used in the right ways? Apparently nobody.

Third, we have the auto companies. We've now hauled them in front of congress how many times, only to have congress interrogate, question, and berate them. These companies are asking for a LOAN not a handout, as was not the case with the banks and AIG. Why is it the auto companies are having so much trouble getting assistance from the government, but we just threw money at the banks and AIG. Once again, it's the banks fault that we are in this mortgage crisis, not the car companies. Yet we gave the banks a blank check with no oversight to spend the American tax payer money how they see fit. Explain that to me? The big three go under and we stand to lose millions of jobs and considerable tax revenue.

 

[GR8_ASP]

Aries - nice letter. It echoes thoughts of many of us. We were also told that Flagstar bank is also recieving a chunk of the TARP funds. I bring that up as the CEO of Flagstar lives a few blocks from me and has a 40,000+ sq ft mansion. An example of the excess that the banking industry acquired in the past decade. It will be interesting to see if he stops using the helicopter for the daily commute to work (only 10 miles away!).

And yes, many are thankful that Bush and the government has found a way to help the auto industry. It is helping to reduce the stress in a very stress filled period. May we now move forward to provide US designed, engineered, developed and manufactured vehicles and help keep the US manufacturing sector alive.

 

[aries]

I just hope that they come up with a good plan to be more profitable. I think the big 3 have some good CEO's in there, the just need more time to turn things around. I am seriously considering buying a Chevy Volt as my next vehical. No gas required for the first 50 miles on each charge, can't beat that. I could drive for a month and only use 5 gallos of gas!!!

 

[kwiksilver]

Wow, just when I thought "W" wasn't going to do anything right during his eight years as pres. he steps up and does this.

 

[Warfang]

BS. Especially Chrysler. I might have to start looking at Ford seriously again.

 

[propsail]

Must be hard for the grand ol' republican concept of no government interference, but I guess that's only when times are good.

 

[Coloviper]

The US government will NOT be able to account for much of the $700B bailout anyway, what's another $17B? Guess we will see how smart this was in the long run.

I give credit to Ford though. I was a Ford man my whole life up to my Viper, Porsche and very brief 2 yr Jeep SRT8 purchase. As far as consumer confidence, Ford has my vote and I am sure they will have a lot of the American people's votes in sales as well just due to their position on this.

I just don't see where the $17B will help GM and Chrysler as quickly as they need. They will still be producing the same vehicles for a few years as we all know at the best, they can not kick out a new vehicle or alternative drivetrain in less than 2 or 3 years. I guess the Dodge electic and Volt programs could be vastly accelerated. Watch the Power Grid tank after the elctricity usage goes up significantly and rolling brown/black outs start taking place with all these electric cars everywhere.

The only program that has me interested in the future is converting all the railroads, the 18 wheelers, and construction equipment to natural gas, which is the interim 20 year solution to allow cleaner emissions and time for alternatives to contribute more all while extending oil reserves. Major infrastructure going in on that one.

At least we might see some postive benefits directly to our faces in new product development with the $17B. The rest of the Bailout, will just be money not accounted for and written off as bas debt. $700B bailout is just lining pockets.

 

[DLTARNU]

Ford has a right to gripe about this bailout, really. They were chided along with GM and Chrysler, even though they never actually asked for money, only that $9BN be held in reserve as a line-of-credit in case one or both of the others folded. What the l-o-c would be used for in that event, I can't say (partial buyout, insurance against supplier prices going up, w/e) but Ford keeps getting painted with the same brush.

Ford is the only U.S. car company who has kept its act together. I've owned 3 Fords in the last 18 years, and I have no complaints about any of them. They designed clean and attractive bodies, while upgrading their interiors to a high standard and greatly improving the mechanical reliability of their automobiles. GM cars kept their crappy plastic interiors, body styles from blind men on LSD (Aztek, anyone? )and drivetrains I wouldn't use in a go-cart.

I own a Viper, as well, but these aren't commodity cars. You can't base Chrysler's business model on their success, or lack thereof, with the Viper anymore than you could gauge Ford as a sound company by its sales of the GT.

And here GM and Chrysler are getting a load of cash, while Ford gets yelled at...and no free money. If GM and Chrysler go into Chapter 11 and successfully re-emerge sans all the legacy costs from the unions, Ford essentially gets screwed on labor costs for running their business correctly.

I don't like seeing anyone lose their job, but for GM, and to a lesser degree with a few notable exceptions (Charger, Neon, Ram SRT, et al), Chrysler, to keep manufacturing pure garbage and expecting customers to keep buying it year after year out of some distorted concept of patriotism was foolish, at best. The writing was on the wall years ago. GM, apparently, is only now learning how to read.

 

[JonB]

Aries - nice letter. It echoes thoughts of many of us. We were also told that Flagstar bank is also recieving a chunk of the TARP funds. I bring that up as the CEO of Flagstar lives a few blocks from me and has a 40,000+ sq ft mansion. An example of the excess that the banking industry acquired in the past decade. It will be interesting to see if he stops using the helicopter for the daily commute to work (only 10 miles away!)..

R......
My bet is he WONT be singing Christmas Carols at YOUR house! Better hope that 'copter does not have armament.

PS.....the 40,000 sq ft home + helipad closest to me is 250 MILES away !

 

[Ricksnake1]

Because of the bailout, I, for one, will never buy a new american made car from a dealer.

 

[ViperNM]

BS. Especially Chrysler. I might have to start looking at Ford seriously again.

You should have been looking earlier. Of the Big 3 Ford has more quality models than the other two. Chrysler and GM have been spotty at best for several years.

Gas, oil changes and regular maintenance on my SVT Focus for over 5 years. Plus they're a hoot to drive. Too bad SVT has been discontinued by Ford for now.

My 2 cents.

 

[GR8_ASP]

R......
My bet is he WONT be singing Christmas Carols at YOUR house! Better hope that 'copter does not have armament.

PS.....the 40,000 sq ft home + helipad closest to me is 250 MILES away !

Now Jon you know he wouldn't be coming along caroling anyway. At least not in my neighborhood.

 

[Camfab]

Because of the bailout, I, for one, will never buy a new american made car from a dealer.

Not really sure what you mean? If they were'nt bailed out, you definitely would'nt be buying a new American car from a dealer. Will you never use a bank or a mortgage company ever again either?

 

[ViperCr8zy]

Ford has made me proud to own my GT500 alongside my Viper ACR. I was incensed at the AIG et al gifts on the taxpayers' dime. I was equally outraged that the auto execs were made to kowtow to the House, only to be denied in the Senate. That decision to outright deny huge numbers of hard working Americans deserves to be remembered at elections for years to come. I'm not necessarily in favor of unions, but I am in favor of American ingenuity, American workers, and American products. Ricksnake - you have it all wrong. I'm buying only American as a result of what I see happening to our great country, and I have a much deeper respect for Ford as a result of all this. Cerebus' excuse to not invest because their internal rules prohibit it was weak and unforgivable in contrast. I wish all Chrysler's workers well and for the best - you don't deserve to be under the yoke of greed-driven management that necessitates these drastic measures.

 

[Chuck 98 RT/10]

I was equally outraged that the auto execs were made to kowtow to the House, only to be denied in the Senate.

That's just politics, don't get too upset about it. Both House and Senate are ruled by Dems and the House requires 66% for passing. Everybody knew Bush was gonna push the loans through so the Dems collaborated to dump the bill in the Senate so they could fall back on the old "Hey, we didn't vote for it" speak in the next election.

In reality 90% of Washington was for it and 90% of the taxpayers were against it.

Change? It aint coming.

 

[DLTARNU]

Because of the bailout, I, for one, will never buy a new american made car from a dealer.

Before swearing off American cars, remember that Ford never asked for, and did not receive, a single penny of taxpayer money

 

[Warfang]

You should have been looking earlier. Of the Big 3 Ford has more quality models than the other two. Chrysler and GM have been spotty at best for several years.

Gas, oil changes and regular maintenance on my SVT Focus for over 5 years. Plus they're a hoot to drive. Too bad SVT has been discontinued by Ford for now.

My 2 cents.

I have owned an 88 Taurus, 93 Probe, 96 Probe, 01 Escape, and 07 Mariner. All pretty reliable cars, but it's the little things... like paint, buttons, fuse door falling off, rain leaking into fusebox shorting out the radio. Again, nothing major, but enough to make me buy a few Pontiacs and never had a problem with them. Viper has been my only Chrysler... so haven't haad a "real" Chrysler yet.

Was going to trade in the Mariner for a Nitro or Jeep, but think I'll get another Ford.

 

[RAYSIR]

Because of the bailout, I, for one, will never buy a new american made car from a dealer.

Yep... you'd be better off buying a used Daewoo..........that would make a point.

 

[VENOMAHOLIC]

Yep... you'd be better off buying a used Daewoo..........that would make a point.

I saw a Hyundai Tiberon with decals that made it look like it had Ferrari side vents that would be more his style.

 

[Warfang]

I saw a Hyundai Tiberon with decals that made it look like it had Ferrari side vents that would be more his style.

Daewoo might be a bit of a joke, but you gotta give Hyundai some credit. They've come a long way and their reliability ranks as high as any other manufacturer.