White House assessing options to aid carmakers
WASHINGTON — The White House weighed its options Saturday for preventing a collapse of the troubled auto industry, once the backbone of the U.S. economy. So far, the only thing certain is that the Bush administration wants to avoid the possibility of a disorderly bankruptcy of any of the Big Three.
General Motors Corp. and Chrysler LLC have said they could run out of cash within weeks without government help.
"Administration officials are continuing to gather financial information from the automakers, assessing the data, their cash position going forward," White House deputy press secretary Tony Fratto said Saturday. "We'll take a look at that information, make some judgments and review our options."
Any avenue of government rescue must surmount political obstacles and take into account the potential fallout on financial markets in a time of recession. The administration is keeping President-elect Barack Obama and his advisers abreast of its discussions.
"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."
The White House and congressional Democrats had agreed on a $14 billion measure that would have extended short-term financing to the industry and set up a "car czar" to make sure the money was used to turn the Big Three into competitive companies. The legislation, however, died when Senate Republicans demanded upfront pay and benefit concessions from the United Auto Workers that union officials rejected.
The failure on Capitol Hill prompted urgent requests for White House intervention. Administration officials were dispatched to weigh the pros and cons of a range of other bailout actions. White House and Treasury Department officials are keeping details of their discussions closely held for fear of affecting markets, but financial experts have zeroed in on a few likely avenues for helping the auto industry and its 3 million workers.
One way is to tap directly into the $700 billion financial rescue bailout fund to provide loans to the carmakers. Another is to use part of the bailout fund as a kind of collateral for emergency loans the automakers could get from the Federal Reserve. The administration also could do nothing, leaving open the possibility that one or more of the automakers could go bankrupt. It also could wait for the new Congress, flush with more Democratic votes when it returns in early January, to try again to get bailout legislation passed.
"In terms of what happens next, it seems like the real question is 'How long can GM really hold out?'" said James Gattuso, a research fellow in regulatory policy at the Heritage Foundation. "I've heard a couple of weeks and I've heard through February. I think only the people on the inside of GM know that."
For weeks, the White House has insisted that the $700 billion financial industry rescue plan enacted in October should be used solely to help financial institutions. On Friday, however, the White House signaled that it would consider using the so-called TARP — Troubled Assets Recovery Program — to prevent auto manufacturers from collapsing.
Critics quickly pointed out the administration's U-turn. They insisted the White House reject calls to do an end-run around Congress and unilaterally use TARP money to help the carmakers. "You're dealing with a significant amount of money and sums of this sort just simply can't be repurposed just because it's there," Gattuso said.
A second possibility offers Bush some political cover. Treasury Secretary Henry Paulson could use part, but not all, of the $15 billion left of the first $350 billion allocated to the TARP to back up loans the automakers could get from the Fed's emergency lending program. That would leave some money to help troubled financial institutions, which Bush has long argued should be the first in line for TARP money.
Federal Reserve Chairman Ben Bernanke has said he's reluctant to use the Fed's emergency lending program for the automakers. Decisions about giving financial aid to Detroit are best left to Congress, he says.
Bernanke also has questioned whether the automakers have sufficient collateral to secure emergency loans from the Fed. And critics worry that other companies might take risks knowing the central bank could help bail them out too.
However, financial analysts who think this avenue for helping the automakers is viable note that in March, faced with the collapse of Bear Stearns, other investment houses were allowed to draw emergency cash loans from the Fed. That marked the broadest expansion of the Fed's lending powers since the 1930s.
If, for example, the Federal Reserve agrees to lend the automakers $15 billion, the Treasury could deposit maybe $5 billion with the Fed to be used first if any of the automakers defaulted, said Vincent Reinhart, director of the Federal Reserve Board's division of monetary affairs from 2001 to 2007. "From the Fed's standpoint, it makes them feel more comfortable, and politically, Bush hasn't used all the resources in the TARP," he said.
Asked whether GM thinks using the TARP money for direct loans or as collateral on loans from the Fed would provide the automaker with enough help in the short-term to avoid a collapse, GM Spokesman Greg Martin on Saturday replied "Yes."
The company's financial staff worked over the weekend exploring options with Treasury officials.
GM announced Friday it would cut an additional 250,000 vehicles from its first-quarter production schedule — a third of its normal output — by temporarily closing 20 factories across North America. The move affects most plants in the U.S., Canada and Mexico.
"If the administration can convince itself that a bankruptcy could be an orderly proceeding, then they could let it happen," Reinhart said.
The Bush administration, which has just weeks left in office, wants to try to avoid a disorderly bankruptcy.
"It's possible that the administration won't do anything," Reinhart said, listing long-running problems with the industry. "If the administration can convince itself that a bankruptcy could be an orderly proceeding, then they could let it happen."
Dec 15, 2008 at 1:28 a.m.
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I hear ya.. Nothing better than slapping a helmet on stupidity and sending them off on the short bus while the ignorant stand back and wait to be taught.
Dec 15, 2008 at 1:20 a.m.
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I know what your saying,but,it's really hard to not indulge in their stupidity!
Dec 15, 2008 at 12:50 a.m.
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Miltownboy, I'm just curious on which industries you feel are going to bring culture and a higher standard of living to this town? As it stands right now, or at least prior to these times, can you name one industry that has prospered in this city other than the medical industry (which will be hurting when insurance for everyone in the automoutive industry in the area runs out)? Can you name one tech company or non blue collar industry that will bring us out of this mess and into a booming economy in this entire county? Perhaps in your mind you feel a "higher standard of living" is cheaper rent and less county services, but I have news for you. Thats actually called a lower standard of living, and the wages will bottom out with the rent.
Woodsman - There is really no sense in continued debates with those that don't have a clue about what the union really stands for. I know it, you know it, but the ones that have no clue don't know it and will continue to spew their ignorance. The ones that find such enjoyment of losing such a large tax base will soon find out how their jobs relied on GM as much as the UAW did (and yes, although I'm not UAW I've read the concessions and the contract that UAW95 settled on in the local contract). I only wish that every retail "assistant" and every last waitress would keep this in mind, especially the ones that are rejoicing over the fall of a major tax base in this county, when it IS their job on the line.
Dec 14, 2008 at 11:30 p.m.
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And to you non union people:If the union movement was never to have been implemented,you non union people would never of made no more then min. wage all these years,truth.Whether your smart enough to believe this,or just to stupid to believe anything other then your own arrogant beliefs.
Dec 14, 2008 at 11:25 p.m.
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Angel, you don't want someone labeling all unions like UAW? Maybe UAW workers at GM don't like all having one label, either. They all have easy jobs, no brains, drink on the job, are ungrateful, selfish, lazy, don't care about their product, aren't willing to compromise...do you see any one of them being ASKED right now?
Dec 14, 2008 at 11:21 p.m.
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MILTOWN"_BOY: You wouldn't know what the word pray means if it hit you in the head! God has to FORGIVE YOU for your ignorants,but i don't. Your MA-MA should be so proud of you to wish ill fate for man kind. Some of our brothers & sisters will lose their homes,turn into alcoholics,get divorced,move away from their loved ones,and maybe even commit suicide. You should be so proud to wish all,or even some of these hardships on another. SHAME ON YOU!!
Dec 14, 2008 at 10:11 p.m.
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I would like to remind people that not all unions are like the UAW. The majority of unions are actually good and they have a purpose. It is not fair to label all unions like the UAW.
Dec 14, 2008 at 9:57 p.m.
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Gee maybe someplace like Stoughton Trailer will move in. They treat their people real good(ha) You get laid off if you didn't smile and kiss butt. They pick and choose. As well as the working conditions. There are reasons people need unions!! Ask people that have worked in some of those places. I forgot, most of you are all about your opinions and slamming GM people
Dec 14, 2008 at 9:40 p.m.
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Miltownboy I hope Janesville does get another employer in the area to employ the non union, non entitlement, hard worker. They deserve to get something out of this.
Dec 14, 2008 at 9:35 p.m.
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Again I state no one has the right to damage another persons property. It is a crime regardless of where it was made. I hope the people doing this vandalism get caught whomever they may be.
Dec 14, 2008 at 9:30 p.m.
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THANKS Chad Vader- Stereotyping people is just wrong. I have an American made vehicle that was vandalized at the mall. It happens, it isn't right. People need to leave their hands off other's property!
Dec 14, 2008 at 9:04 p.m.
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I'll bet that's what your ex mate says about you,stick in the mud,boring,no fun,no hum er,smile,you might like it. Plus back in those days,who had ins.??? Maybe your kind of fun was setting in the library!
Dec 14, 2008 at 2:46 p.m.
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I'm sure he thought it was cool. His hard earned money down the tubes in all unless he turned the coolness into his insurance company, I'm sure if he did with his coolness and all we are all paying higher rates. Woodsman get an education or get off the bar stool which ever it is that is condoning this deviant behavior.
Dec 14, 2008 at 1:47 p.m.
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So what part of no one thinks it's funny? Some people just read to much negative into things,the box is open,think outside ya all!! The guy that the bike was burned thought it was coooooooool when it was all said and done. No wanna be hells angels among my brothers,just a bond that "WE" only know,called BROTHERHOOD!
Dec 14, 2008 at 12:15 p.m.
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Woodsman just because a group of people commits a criminal act doesn't mean it's not criminal. No one has the right to damage anothers property.
Dec 14, 2008 at 9:24 a.m.
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localboysince1968 - is it really the marketplace speaking? Seems to me there hardly is a marketplace now. The financial demise is mainly responsible for GM to make a turnaround on it's own right now. Yes, some sacrifices need to be made. But seeing as how GM outsold Toyota last year, how did the marketplace throw them into this mess? GM's quality is world class, they make more vehicles that get over 30 mpg than any other car manufacturer, and many models offer more bang for the buck. It's the misplaced, un-american need to punish the "big guy" with rumors and innuendo that gets sickening. And I have no problem with free choice, but the "superiority" dance the foreign auto buyers do reminds me of the Church Lady. Jasper - sorry about the vandalism. That was done by a mindless thug, not by any of the good people I work with. Remember, if your neighbor turns out to be an axe murderer that doesn't make YOU one. Remember people,everyone is responsible for their OWN actions, grouping people together is just ignorance
Dec 14, 2008 at 9 a.m.
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Is the union going to strike if it doesn't get the deal that it wants?
Dec 14, 2008 at 1:52 a.m.
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Woodsman...It is not the Governments duty to "require" a company to operate anywhere. So for you to say "If the government wouldn't keep letting our jobs leave our shores,then we wouldn't have to resort to buying foreign crap" is misplaced logic. Buying foreign is a consumer choice, and the government should not be involved in consumer choice just as they should not be involved in where a company operates.
Dec 13, 2008 at 11:51 p.m.
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WRONG!!! TWO BITS WOULD BE FINE.
Dec 13, 2008 at 11:15 p.m.
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Only 12% of the US workforce are union members. They must be doing something right if they can run the whole country`s economy with that pitiful number! Minimum wage adjusted for inflation should be at least $9.50 now. So let`s make the union people work for that. Right?
Dec 13, 2008 at 11:11 p.m.
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Watch the movie, Who killed the electric car?, and you will learn why Bush does not want the Big 3 to fail. He needs them to keep building these large cars so he and his oil buddies can keep getting rich. You don't think he really cares about the workers do you?
Dec 13, 2008 at 9:50 p.m.
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Well I hope now they make all the Great U.S.of A states right to work and get rid of these darn unions then maybe we can save our country
Dec 13, 2008 at 9:42 p.m.
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If the government wouldn't keep letting our jobs leave our shores,then we wouldn't have to resort to buying foreign crap. I think what the uaw said is,they are willing to give concessions,after they see what the ceo's and such are willing to give up,you know,like everyone sleeping together,not in separate rooms like they have been. The same page thing!
Dec 13, 2008 at 7:29 p.m.
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What I said wasn't an accusation of UAW members I even said I knew UAW members who wouldn't stoop to this petty crime. I even said it may be a teenager. No one knows who did it except the ones who did it unless someone actually saw it occur. This is a free country every one is innocent until proven guilty and everyone is free to buy whatever they want with their own wages. I was trying to point out the absurdity of the statements made that Jasper deserved this. NO ONE deserves to have their property damaged and NO ONE has the right to damage others property. Its a criminal act.
Dec 13, 2008 at 7:19 p.m.
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I am still dumbfounded on how the plight of the D3 becomes the fault of the taxpayers. Nobody wants to see people loose their jobs, but we have decided to live in a capitalist society, and the marketplace has spoken. Then on top of that, you have a UAW leader who is firm in saying that his membership will not give up any more to save the company. The taxpayers are going to risk/give up $14Bm but the UAW will not give in anymore. No personal sacrifice from the UAW, but their entitlement mind frame believes it is the responsibility of the government to make sure they are profitable. I just can't get over it. Where does it end? Can we round up any company who can't turn a profit and give them a government loan? Why would this be different?
Dec 13, 2008 at 6:40 p.m.
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Woodsman can you tell me why if this is an American made town, why is it that everyone of the current and former UAW members have foreign made products in their house? I've heard these workers actually discussing how bad it is to buy a foreign vehicle while there foreign big screen tv is on. Little ironic isn't it. Sounds like do as I say and not as I do.
I do believe that we should buy American and I always owned a American made vehicle. Saying that I could never make such a brash statement about buying American.
Dec 13, 2008 at 5:40 p.m.
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I have been to harley parties through the years,some goofy guy drove up with a jap. bike,by the end of the night the bike turned into fire wood,just the way it is,wrong place,wrong time. Not that i did it,or that it was right,but someone must've thought jap. didn't belong at a HARLEY PARTY!!
Dec 13, 2008 at 5:32 p.m.
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AMEN::: To even suggest it was an american auto worker that did it,that's why jasper isn't buying an AMERICAN VEHICLE,just plain ignorant,i'd say! People that drive that crap,will come up with any excuse to justify their actions.
Dec 13, 2008 at 5:13 p.m.
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Sounds like unfounded allegations by the foreign owner. But ok, I'll play too. It was 1971 and I was working the night shift in Fort Atkinson. It was raining hard and I left at the normal time, 11pm. Someone had taken the wiper blades from my '61 Chevy. Now with this newfound wisdom that I have learned from Jasper, I know that it was a foreign car owner who stole my wiper blades.
Dec 13, 2008 at 3:53 p.m.
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Woodsman is this type of criminal behavior common with UAW employees? I hope not. I did know some UAW employees who were hard working honest people who would never stoop to this type of petty criminal behavior.
Dec 13, 2008 at 3:27 p.m.
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Woodsman even if you don't agree with Jasper's choice in what auto he/she purchased with his own hard earned money it doesn't give anyone the right to commit a crime in damaging it. I can't believe you'd act like he/she deserved to have his/her property damaged because you don't like how he/she spent his/her money. I'm hoping it was just a teenage prank and not a disgruntled worker. This is a shame that here in America where we have a choice of how to spend our money someone would feel justified in breaking the law.
Dec 13, 2008 at 2:57 p.m.
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Jasper i'm not saying what happened is right,but if you live in an american vehicle made town,things happen! Just like going into a black neighborhood in chicago,& being white,things happen,way of life,GET OVER IT,or buy american next time,don't feel sorry for "YOU" at all!!! Your chose,your demise.
Dec 13, 2008 at 1:10 p.m.
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How much of this TARP money will be used for the U.S. Auto market and how much will end up in Canada or Mexico (NAFTA)? This is very important. Are we going to finance employment outside of the U.S.? I do not want 1 cent of this money to leave the borders of the United States for any purpose.The fact is I do not like the position the Automakers have placed the American taxpayer in. They made the mistakes not us and after listening to the UAW president talking about how if we don't do this millions will suffer yet he says they (UAW) will not make the concessions that need to be made? And that is our fault how? I receive 0 benefits from GM and by doing this all I am doing is hurting myself so they can continue to do business as usual? Any entity that has that kind of negative impact on the American populace needs and should be regulated big time!
Dec 13, 2008 at 11:35 a.m.
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I have had Toyota's my last three cars. Great cars never had any trouble with them. We recently bought a 2008 Saturn. I am truly amazed at the quality of this vehicle. I almost bought another Toyota but this Saturn is a much better vehicle than Toyota had to offer. I would hate to see the Saturn line go down the tubes. The people at Saturn are first class and treat you like family whenever you go there for service.
Dec 13, 2008 at 10:07 a.m.
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Sorry to hear that happened to you. It's called criminal damage to property and I hope whoever did it gets caught. Its sad that people have to resort to that type of behavior.
Dec 13, 2008 at 9:25 a.m.
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I've had thoughts about giving the American car makers another chance until my foreign car was vandalized at a Janesville restaurant a few weeks ago. If this is how the "Buy American" crowd responds to adversity. I will have no alternative except to look at foreign only vehicles.
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