Bush announces $17.4 billion auto bailout

[The Master]

President Bush is announcing a $17.4 billion bailout for auto manufacturers, with the loans contingent on the firms proving that they can become "viable" ongoing firms.

Of the total, $13.4 billion will be paid out in December and January The last $4 billion is contingent on the second installment of the Wall Street bailout funds from Congress.

The announcement immediately affects GM and Chrysler, not Ford, administration officials said.

The firms do not have to be profitable but have to be "profitable soon," a senior administration official said.

Here are the details of the White House plan:

Fact Sheet: Financing Assistance to Facilitate the

Restructuring of Automobile Manufacturers to Attain Financial Viability

Purpose: 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.

Amount: Auto manufacturers will be provided with $13.4 B in short-term financing from the TARP, with an additional $4 B available in February, contingent upon drawing down the second tranche of TARP funds.

(Excerpt) Read more at Politico ...

[The Master]

Paulson will head this up. Allowing the automakers to float until the new administration takes charge. They claim that they would have to liquidate. Bush is intervening due to "un-ordinary" circumstances.

Bush is ONLY afraid that he will have a bad name! Nothing more!

[The Master]

By march 31st the automakers have to make their wages and work rules competitive with foreign automakers. This is going to be a tough one for the big 3 considering that the Unions are not going to be all that accepting of wage cuts for their workers.

They also have to have their retirement funds put on a sustainable footing and once again we have the unions that will not be happy with this one. This is one of the largest sticking points for the Union. We all know that the Health and retirement funds for the retirees has been a sad but disgraceful budget buster for the big3.

The automakers have until March 31st to get this crap straight....which just means that the Obama Administration and the democrats in Congress will be able to pass a new bill bailing them out...or they will have to do immediate paybacks with interest.

Of course, as I captioned above, the new administration will just chew up the old one and spit it out the rules and pass a new bailout for the big3 so they do not have to worry about chapter 11 or chapter 7.

We are spending too much too quickly.

[Deepskyy]

Yup. We are about to eclipse the total net worth of the American populace.

[Bama]

Bush afraid of having a bad name? Its a little late for that i think. haha And your probably right about the next admin. giving them another bailout when they still can't make a profit in 4 months.

[Deepskyy]

Suprise Suprise...
They snapped up the loan money and are already chomping at the bit for mor from the Obama administration.
These Vampires will not stop until they are a completely government subsidized and government controlled company apparently. Beware of Marxists in Capitalist robes...

President Bush gave the U.S. automakers $17.4 billion in emergency rescue loans, but the fate of the industry is in the hands of President-elect Barack Obama.

Simply letting the carmakers collapse was not an option amid a recession, housing slump and financial credit crunch, Bush said Friday in announcing the short-term loans and demanding tough concessions from the automakers and their employees.

"The more responsible option is to give the auto companies an incentive to restructure outside of bankruptcy and a brief window in which to do it," he said.

Detroit's Big Three cheered the action and vowed to rebuild their once-mighty industry, though they acknowledged it would be tough to fight their way back from the brink of bankruptcy. If the carmakers fail to prove viability -- a positive cash flow and ability to make good on the loans -- by March 31, they will be required to repay the government loans.

That's something they would find all but impossible to do.

The autoworkers union complained the deal was too harsh on its members, while Bush's fellow Republicans in Congress said it was simply bad business to bail out the industry using money from the $700 billion rescue program for financial institutions.

Obama, who takes office a month from Saturday, praised the administration action but warned, "The auto companies must not squander this chance to reform bad management practices and begin the long-term restructuring that is absolutely necessary to save this critical industry and the millions of American jobs that depend on it."

Obama will be free to reopen the arrangement from the government's side if he chooses, and the head of the United Auto Workers said the union would be appealing to the new president and the strongly Democratic new Congress on that subject. Obama was noncommittal on possible changes but said he would "make sure that when we see a final restructuring package that it's not just workers who are bearing the brunt."

Source

[BlackStone]

Is anybody surprised?