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Hill to Detroit: You Want Money? Play By Our Rules.

Earlier today, House Speaker Nancy Pelosi (D-Calif.) said that she and Senate Leader Harry Reid (D-Nev.) will send a letter to the heads of GM, Ford and Chrysler, telling them what they need to show Congress in order to get federal bailout money.

Earlier this week, GM's Rick Wagoner, Ford's Alan Mulally and Chrysler's Bob Nardelli (along with UAW head Ron Gettelfinger) were in Washington asking lawmakers for $25 billion in emergency cash so they can, essentially, stay in business.

But Pelosi, Reid and other lawmakers were unmoved by the plea, saying to automakers: We know you need help, but you haven't adequately told us what you will do with the money which, by the way, comes from taxpayers.

So Pelosi and Reid have decided to be helpful, much like a teacher telling a student how to format the answer to an essay question.

Pelosi said that she wants lawmakers to tell Congress that, if it approves the bailout, Detroit will:
-- pay no shareholder dividends,
-- give no bonuses to employees making more than $200,000,
-- explain how they will invest in advanced technology to make more fuel-efficient vehicles.

If Detroit bites on this, this will represent a significant and at one time unthinkable step forward in federal government control of how a private business runs itself. Think about it: This is Congress telling GM how to set corporate policy, at least for the term of a loan, which could be up to 10 years.

Congress is asking for conditions on a loan. Presumably, once Detroit pays back the loans -- if they can -- Washington's control of the Big Three's day-to-day operations will cease. Presumably.

We'll show you the letter when it's released, so check back here. (Which you should be doing several times a day, every day, anyway!)

-- Frank Ahrens

The Ticker is Twittering!

By Frank Ahrens  |  November 21, 2008; 2:02 PM ET
Categories:  The Ticker  | Tags: Detroit bailout, automakers  
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Comments

If Detroit bites on this, this will represent a significant and at one time unthinkable step forward in federal government control of how a private business runs itself. Think about it: This is Congress telling GM how to set corporate policy, at least for the term of a loan, which could be up to 10 years.

-Uhhhhhmmmmmmm yea. I think it's an unthinkable step to come crying to the government to bail out stupid over paid management in the first place. I've never believed in the free market and it sounds like you did. Sorry to burst your Reagan bubble, but gov't has always had a hand in our big businesses.....it had just been more shadowy before.

I don't see a condition that all officers and board immediately cease working for the Big 3 which is what should actually happen.

We can buy all 3 of these dinosaurs and run them right for less than $25 billion. Why not???

Posted by: theobserver4 | November 21, 2008 2:54 PM | Report abuse

Why weren't the same strigent conditions put on AIG and the banks? Billions of dollars "loaned" so theu could go out and buy up other banks. What about the billion dollar loophole that the banks are enjoying with our money. Something smells bad. Hmmmmm smells like more corruption and payola for some people.

Posted by: jfeliccia | November 21, 2008 3:01 PM | Report abuse

Detroit has the option to sign up. No one is holding their hands to the fire. There should be and needs to be requirements for a loan - any institution, including banks or venture capitalists would require it. There needs to be a charter dictating that upon repayment, all government intervention shall cease. Otherwise, no dough...

Posted by: altruisticone | November 21, 2008 3:02 PM | Report abuse

Sounds fair to me.

(and I own shares in Ford)

Posted by: WillSeattle | November 21, 2008 3:07 PM | Report abuse

Best possible outcome that could happen to the big 3 is bankruptcy. Then maybe, MAYBE they could re-organize. Not that labor is the only problem but the only reason Congress is involved is so all those union contracts don't go up in smoke.

Posted by: bob53 | November 21, 2008 3:17 PM | Report abuse

We do need the big 3 for some things. You can trash the SUVs, you can close down the car plants, but for God's sake, don't let the F series and 2500 series trucks die out.

Nothing the Eurotrash or Japs come up with comes close to competing against them. If nothing else, at least take those units and spin them off the main beast if they've got to die out.

Posted by: JamesPDBuchanan | November 21, 2008 3:19 PM | Report abuse

As the recent Congressional hearings indicated, senators and congressmen alike stated that the Big 3 auto makers have a failed business model.

There was a recent segment on one of the national news stations showing workers in the south at a Honda plant. Their CEO only receives a million dollars in salary, the workers have a job for life and when the plant went idle the company paid the workers during their layoff to go out into the community to perform community services. The workers mentioned that this was the best company they ever worked for as they treat their workers with respect and because of that, the workers want to do their best to help their company succeed. Their auto lines are efficient, their management structure is lean and they are able to make significant changes within a short period of time when the market conditions warrant.

Compare that to the adversarial role between labor and management in the U.S. auto industry over the last 40 years, the redundancy of autos...GM makes over 60 models and 100 of variations of those models... and a bloated management structure resistant to change.

The managers should have foreseen the fact that emerging third world companies would be competing for fewer resources which would drive up the price of fuel. The fact that the auto manufactures lobbied Congress against any legislation that would increase fuel efficiency is an indication of the arrogance and stupidity of the CEO's of these companies.

The rationale that they were only selling to consumer demand is ridiculous when their top economic advisers should be warning them that both India and China would be increasing consumption by more than 50% over the next 10 years which would drive up the price of crude oil. The latest CIA report attests to this. They should also have been aware that any disruption in the supply of oil caused by war, terrorism etc. would eliminate consumer demand for these products. There problems started when the price of fuel was over $4 dollars a gallon not when the financial meltdown occurred. They were losing money long before this and losing market share rapidly to foreign competition based on a better business model.

Their business model is flawed and their own expert states that they would not be able to pay back the taxpayers the bailout money. Throwing good money after bad, is not the solution. They have to many legacy costs to be competitive and the only way for them to be competitive would be to shed those legacy costs in Chapter 11 re-organization. They touted the free market system, then they should live by the results of that market system which rewards those who have a successful plan and eliminates those that do not.

Posted by: Ecoclimber | November 21, 2008 3:24 PM | Report abuse

These folks were perfectly happy to give their constituents the money early on but they looked around and saw genuine anger out there in America if they were to do that. So they did the political thing and pretended they were even angrier then the rest of us. This makes them look like they are on the public's side despite its being a strategy to get the money out there. Hence the apparence of "hard bargaining."

Except it really isn't hard bargaining. I think stockholders have already lost their value so one would doubt they would get dividends under any circumstances. A real hard look would include getting rid of the job bank where laid off workers no longer keep 95% of their salaries for two years, or reducing onerous pension liabilities.

As noted elsewhere, this isn't about avoiding bankruptcy, they are already bankrupt. The path is clear for anyone that doesn't have a vested interest in this. Just how you time it.

Posted by: jhtlag1 | November 21, 2008 3:26 PM | Report abuse

You'd rather we just give them the money without strings? Try getting money without conditions on your own at a financial institution. Obviously current "corporate policies" aren't working--somebody has to force these executives to change them.

Your comments, Mr. Ahrens, are frighteningly naive.

Posted by: codysea | November 21, 2008 3:26 PM | Report abuse

The law treats corporations as if they were persons. Unfortunately the law does not require corporations to feel shame, which is what so many bashers seem to clamor for. Maybe bankruptcy serves the Detroit carmakers right, but how does it serve the millions of us who rely on their vehicles?

Posted by: mattintx | November 21, 2008 3:27 PM | Report abuse

Would it not be more logical to let all three seek bankruptcy protection and refuse financial assistance until the following conditions are met :
1) All CEO's , and presidents must resign and appoint new leadership.
2) No bonuses to anyone making over $75,000.00
3) All corporate luxury vehicles will be sold - including ALL company jets

Posted by: joelist | November 21, 2008 3:27 PM | Report abuse

Finally a step in the right direction. If we are going to bailout companies, we need to have some control as to how the money is spent.

Posted by: mrshep | November 21, 2008 3:30 PM | Report abuse

Unless this plan includes an agreement to renegotiate the UAW contracts then it is doomed to fail. The legacy costs from these earlier agreements are killing the automotive industry. I wish it was as simple as firing the overly paid CEOs

Posted by: MarkUSAF | November 21, 2008 3:31 PM | Report abuse

Ummm, I think it is best summed up by father's all across America: If you live under my roof you live by my rules.

Don't take the money if you don't want the restrictions.

Posted by: caribis | November 21, 2008 3:32 PM | Report abuse

If Detroit bites on this, this will represent a significant and at one time unthinkable step forward in federal government control of how a private business runs itself. Think about it: This is Congress telling GM how to set corporate policy, at least for the term of a loan, which could be up to 10 years.

-------

How is this any different from a small business asking the government for money, via the SBA?

It's not, they're simply asking for a cogent, realistic business plan -- the government is investing, it deserves no less.

GM shouldn't need welfare, it's mistakes are a direct result of lousy CEO's.

They're showing good sense, actually.

I only hope it's clean...

Posted by: thegreatpotatospamof2003 | November 21, 2008 3:33 PM | Report abuse

The restriction on dividends seems a little odd to me. One of the only reasons to buy stock in one of these companies is that they pay dividends. If they can use a dividend as a way to entice more stockholders, it seems like that would be better for the company in the long term.

I hate this fungible "try to see what you can do about polluting a little less" language. It sounds like a classic feel-good, do-nothing approach with loopholes big enough to drive a Hummer through.

Also, I'm not a big fan of the auto industry, but why didn't the financial industry bailout receive this much scrutiny?

Posted by: klautsack | November 21, 2008 3:33 PM | Report abuse

"Why weren't the same strigent conditions put on AIG and the banks? Billions of dollars 'loaned' so they could go out and buy up other banks."

Because that was pushed through by the Republican administration. Things are changing, a little too late for us tax-payers, and our children, and their children ...

Posted by: Noel249 | November 21, 2008 3:36 PM | Report abuse

Glad to see the corporate dinosaurs made to adhere to some rules. About time.

Posted by: fluxgirl | November 21, 2008 3:37 PM | Report abuse

It is much easier and less expensive to keep 10 million people working than it is to put them back to work after they have lost their jobs.

The automakers all had plans that were working well before this economic crisis arose. They are on the verge of introducing superior, more fuel efficient and environmentally friendly products, they have significantly reduced their costs, and the union has made significant concessions to allow them to bring their labor costs on par with their foreign competitors. Unlike their foreign competitors, they did this without government assistance. The data that is being presented by the media and used by the legislators to evaluate them is outdated and incorrect.

They did not bring this economy to its knees and cause it to put themselves in jeopardy. The banks and the government did and we still gave them money that is not being used to create commerce. As a result, the government and the banks will be liable if the car companies are allowed to fail, not only to the car companies, but also to the 10 million Americans who will be put out of work..

http://ewebsmith.com/gov/autobailout.html

Posted by: websmith1 | November 21, 2008 3:42 PM | Report abuse

this is just a show...
they know they can't pass a bailout until obama takes office...
this is just fodder to blame President Bush...
you, obamamorons should know this by now...

Posted by: DwightCollins | November 21, 2008 3:43 PM | Report abuse

Obviously these are difficult times with lots of frustrations and fears. It’s hard not to express our most base, emotional reaction to every tiny bit of economic news. But maybe we all need to take a deep breath on the issue of GM or any of the Big Three executives using corporate jets. How were they supposed to get to Washington, car pool? Where is the same scrutiny of the Wall Street executives and their travel arrangements? These are the same financial executives who rolled the dice on derivatives, sub prime backed real estates bonds and other remarkably silly financial products.

The truth is there is plenty of blame to go around. This financial mess our country is experiencing had a lot of fathers. So let’s hold off on happily flushing the core of the American manufacturing industry down the drain. If the Big Three falls then their primary suppliers are the next to fall. The American steel industry, the aluminum industry, plastics, rubber, energy, glass, electronic suppliers which one, if any, could you point to and declare it safe. Don’t just think of the lead domino, think of all the dominos. Remember these core industries are also the basis for your defense manufactures. If you let these businesses unravel, they would be time consuming and difficult to rebuild in a national emergency.

The financial industry has been strangely quiet about the proposed bail out of the Big Three. After receiving their little seven hundred million dollars stipend they have got to be aware that losing the Big Three would put one million and a half to two million and a half of their customers on the street. Call them customers or call them ‘life blood’ the already fragile financial markets would only survive in a grossly atrophied and shrunken form.

Yes, the Big Three did a pretty poor job of presenting their case to the legislature. GM, Ford and Chrysler seemed to have no idea how used and abused the American tax payer is feeling right now. But used and abused and out of work would be even worse.

Truthfully Detroit is probably making the best cars they have ever made. Yet there is no question they have been behind the curve on fuel economy and alternative energy use but the answer is not to kill them off by neglect. I think one of the things we may need is a more uniform standard for deciding who is ‘bailed-out’ and under what guidelines bail-out funds are distributed. The rush to write Wall Street a blank check and thumb our nose at blue collar industries smells a little like one of those ‘isms’. Elitism, regionalism, pure politics or some other counter productive caste or class stupidity. Can’t Washington see, in economics everything is connected. You can’t mortally wound manufacturing and expect finance, agriculture and the service industry to keep clicking along. It’s all connected.
Harold619

Posted by: harold619 | November 21, 2008 3:43 PM | Report abuse

What about re-negotiating with the UAW to reduce current and future benefits?

What about a strategic plan to reduce costs over the loan term?

Or how about an even better idea; why not let these companies enter into Chapter 11? Let them renegotiate with creditors restructure operations, sell off parts of the companies, then emerge even stronger?


Posted by: Mustachio | November 21, 2008 3:43 PM | Report abuse

I hope they refuse the money and claim bankruptcy.

Unions have become a scourge. Just another example of how something that exists for the benefit of the people becomes an albatross that hurts more than it helps.

Toyota's American workforce seem to be doing just fine sans Union.

I am an IT worker and there has never been a union for us. My industry has had to adapt to global competition from India and China just like the Auto industry has, and outsourcing has resulted in salary adjustments in my industry, so why should the auto industry be any different.

Everyone wants free market capitalism until its their pay that has to suffer from competition.

Posted by: ProfessorWrightBSU | November 21, 2008 3:44 PM | Report abuse

"I hate this fungible "try to see what you can do about polluting a little less" language."

When using a word like "fungible", traditionally, one ought to have at least a basic grasp of its meaning.

Posted by: charlesbakerharris | November 21, 2008 3:47 PM | Report abuse

I see some posters complaining that Congress has no right to tell businses's how to run their business. Guess what? Business's have no "rights" to taxpayers bailout dollars either. If a business takes government monies, Congress most certainly does have the right to attach any strings they see fit.

Posted by: morningglory51 | November 21, 2008 3:55 PM | Report abuse

Certainly Congressional leaders have gotten the word from an angry public and in providing funds to prop up the auto industry these coporate heads will be fired. See my other views at:http://www.texasbaldeagle.blogspot.com/

Posted by: GeorgenotWinTexas | November 21, 2008 3:57 PM | Report abuse

As one would expect from these Democratic leaders in Congress, the actions they wish the Big Three to agree to, are relatively modest and not especially controversial. They do not seem to mind the huge salaries being paid to top management or the generous compensation to workers, about three times on an hourly basis, to that of "average" workers in the United States. The Big Three will likely readily accede to these modest requests from Reid and Pelosi, if this is all a majority in both houses of Congress expect.

Posted by: Aprogressiveindependent | November 21, 2008 4:01 PM | Report abuse

Not Enough. Here's what they really need to do:

Big Three - When you come back, here’s the minimum of what you need to have accomplished:

• Negotiate with shareholders, creditors, workers, pensioners, managers and dealers to reduce Entitlements, Downgrade credit debt, and Close underused Factories and Dealerships.

• Replace failed executives and severely reduce executive compensation rates (especially at GM, as Ford seems to have done well).

• Show a clear cut Business plan to produce High quality fuel efficient vehicles over a long term, and identify your methods and timeframe for repayment of taxpayer loans.

• Stop your whining about not being able to make 35mpg hybrids across your product line, and just get it done.

• Show us how you will regroup, retool, and recreate yourselves with a competitive business model based on solid products and values.


Anything less would make you undeserving of Taxpayer support over an alternative plan of attracting Toyota, Honda, and Nissan to build plants in Detroit and provide Jobs for ex-GM, Ford, and Chrysler workers.

BTW, Honda is creating Jobs in Ohio and doing quite well for giving us products we want to buy;

http://www.cnn.com/2008/US/11/20/honda.town/index.html

Posted by: liveride | November 21, 2008 4:03 PM | Report abuse

short of a structured bankruptcy which will allow the U.S.carmakers to renegotiate their UAW contracts and reduce labor costs, all this is a fools errand.

Pelosi, Reed and the Democrats are not asking their labor contributors to contribute to a viable solution. These companies will be back for more as they continue to bleed cash with every car they manufacute and sell. All a bailout will do is buy more labor solidarity for the party but not bring one degree of clarity to the problem.

Posted by: bobfbell | November 21, 2008 4:04 PM | Report abuse

Three comments:
a) Yes the automakers do need to clean up their act, and be willing to admit they made mistakes.
b) The financial institutions who have been largely responsible for this fiscal mess should have been forced to follow this same path. Billions were just thrown at them - not even loaned but given.
c) Shelby needs to shut up. His motives are clear. Destroy the big three so my Honda and Toyota plants in Alabama can thrive and I'll look great to my folks back home. He's selfish and not thinking of the country, just himself.

Posted by: lwcooke | November 21, 2008 4:07 PM | Report abuse

YOUR ASKING THE AUTO INDUSTRY TO PLAY BY YOUR RULES. JUST HOW FUNNY IS THAT! WHY IS IT THAT THE BUSH ADMINISTRATION AND HIS THUGS COULD GET AWAY AND DO AS THEY DAMM WELL PLEASE! THIS CONGRESS IS TAKING BREAD OUT OF THE MOUTHS OF AMERICAN CITIZENS. WHY NOT START COLLECTING MONEY AND FINES THE OIL COMPANIES OWES AMERICA.??? GIVE SOME OF THOSE BILLIONS TO THE TAX PAYERS OF THIS NATION WHO HAVE BEEN CHEATED OUT OF THEIR RIGHTFUL SHARE OF FUNDS WASHINGTON HAS MADE FROM BIG CORPS. LETS ALL PLAY BY THE RULES AND GET SOME FUNDING , AND WHAT IS THE INTEREST RATE FOR THESE LOANS TO CORPS.

JUST ONE MORE COMMENT. BUSH IS EXTENDING UNEMPLOYMENT - THIS IS THE GUY WHO HAS CAUSED ALL OUR PROBLEMS - SO WHATS THE BIG RAH RAH FOR A MAN WHO DOESNT GIVE TWO CENTS FOR THE AVERAGE AMERICAN. THE WHOLE SITUATION IS TO KEEP OUR MONEY AND WASH. CAN MAKE NICE TO THE AUTO INDUSTRY. ME THINKS THE AMISH PEOPLE AND THE HORSE AND BUGGY DAYS ARE THE WAY TO GO. OUR AUTO PARTS ARE NOT MADE IN THIS COUNTRY SO WHO ARE WE SAVING. CHINA, MEXICO ETC.

Posted by: LOONYBIN2000 | November 21, 2008 4:09 PM | Report abuse

liveride mentioned dealers. Dealers could pose a huge problem for any restructuring.

State "dealer protection" laws make it almost impossible for manufacturers to simply terminate a dealer franchise agreement. I don't know if federal bankruptcy law can override such state laws.

If bankruptcy law allows terminating dealer franchise agreements like almost all other contracts, then a restructuring may have a chance. But if dealers can force the manufacturer to buy them out, this would mean that federal bailout funds would be used to buy out dealers. The pubic won't accept this.

Congress, however, loves car dealers. Every district has at least one, and most have several, if not dozens. The dealers contribute significant amounts of cash to Congressional campaigns. They have great lobbyists. Would Congress require bailing out the dealers as well as the manufacturers? They'd certainly try.

When Oldsmobile folded, GM had to buy out the Olds dealers. Congress made this severance pay tax free. Of course, severance pay to workers is taxable, but Congress doesn't love workers like they love dealers.

The fine people who send in the "sales manager" to tell you that the price you just negotiated is too low, that he wants to sell you the car, but you have to help by paying more, that they can't go that low, they gotta make money, they can't sell you the car at a loss...frak 'em. Throw them to the wolves. No bailout money for dealers. Let 'em die. They're all scum.

Posted by: Garak | November 21, 2008 4:25 PM | Report abuse

Hill to Wall Street. You want money.. No plan necessary.. Unlimited loot available..let us know and we will continue to fleece the sheep!

Posted by: tlgpestars | November 21, 2008 4:28 PM | Report abuse

Hill to Wall Street. You want money.. No plan necessary.. Unlimited loot available..let us know and we will continue to fleece the sheep!

Posted by: tlgpestars | November 21, 2008 4:28 PM | Report abuse

Why throw more money into a hole? There's nothing wrong with GM that Chapter 11 reorganization can't fix, along with voiding state dealer protection laws.

Posted by: raschumacher | November 21, 2008 4:36 PM | Report abuse

There is nothing once-unthinkable or unprecedented about this. When a corporation takes out a multi-billion dollar credit facility to avoid bankruptcy, the lender makes it sign onto hundreds of pages of restrictive reps, conditions, and warranties to make sure it gets paid back. The government as a lender should go futher and make sure the money is used consistent with public aims. That's what a government does. If GM doesn't like the terms, it should issue corporate bonds to the public and see if it finds the underwriter's terms less unprecedented or unthinkable.

Posted by: wharwood | November 21, 2008 4:39 PM | Report abuse

HA HA HA HA

These idiots are now telling the car companies how to run their businesses! They will go bankrupt even faster now!

Posted by: pgr88 | November 21, 2008 4:42 PM | Report abuse

Why don't we run an experiment? There are three companies. Company A should take federal money with all the restrictions. Company B should declare bankruptcy and continue after getting relief from debts and labor contracts. Company C should try to make it without bankruptcy and without a federal loan. Check back in five years and again in ten to see which was best for the companies and their suppliers.

Posted by: sscritic | November 21, 2008 4:48 PM | Report abuse

Congress should send the Big 3 to the banks to whom we gave $700 billion to make new loans. The banks know how to vette an applicant for a loan. Congress doesn't. And that way we can use the $700 billion already authorized. Just tell them to tell Bank of America, Wells Fargo, etc., that Nancy sent you.

Posted by: rb-freedom-for-all | November 21, 2008 4:50 PM | Report abuse

I can't understand why this issue is framed as a choice between paying taxpayer money or not. The consequences of failure for the auto industry will result in tax payer money used for pension and healthcare as well as lost tax revenue on a federal, state and local basis. Plus hughe increase in unemployment benefit spending. So not lending money to the automotive industry will result in the largest quantity of tax payer money spent. Not as a loan but as an obligation, every year, until all of the retirees and current employees die off. So the issue, correctly framed by the Democratic leadership is not if but how will tax payer money be used? Should it be used through pension guarantees and healthcare coverage like the airline bailout or can this industry pay these costs and repay a loan, with interest to the federal government? I am not sure why the congress has allowed this issue to be framed by a small group of Republicans (some of which receive large benefits from foreign automotive companies) as a simple choice of spending the money or not. The most costly option for taxpayers will be to allow these companies to fail. If saving taxpayer money is the largest criteria then the choice is clear. The sad fact is for many of the opponents there are serious special interest factors at work and no one is investigating. Why? Why is no one questioning the arguments and the motivations of these sudden advocates of "free market darwinism". Why is there no outrage about federal intervention over financial companies. Citigroup, which has received 3 federal bailouts since the 1990's is once again in trouble. Shouldn't we be figuring out the best way to save money to pay for them? The best way may not be to collapse yet another part of the economy. At some point we may wish to look at the supply of tax money and realize that it comes from people working. Duh.

Posted by: realityvision | November 21, 2008 5:01 PM | Report abuse

Anyone who thinks it is asking too much for the Auto Makers to present a business plan must never have gone to a bank for a business loan.
Since we are bailing out these banks to the tune of over $700 BILLION, why not make a requirement that they need to make loans to the Auto Makers.
Note - Ford isn't that bad off and can get by without the loan.
Regardless of what happens the cost of vehicles need too come down so the common person can afford to buy American, how does the Auto Makers and UAM expect to manufacture vehicles with labor cost of $25 - $30 an hour + benefits to a general public that makes min. wage to $15 an hour.
Auto Makers should have been building fuel efficient vehicles after the 1970's so call oil embargo (this was another scam contrived by the oil companies) but since the oil companies and Auto Makers were in bed together, it wasn't done.
Maybe the Oil Companies should loan some of their excessive profits to the Auto Makers.

Posted by: ewersmith | November 21, 2008 5:02 PM | Report abuse

I personally felt the grand standing by the lawmakers to publically humiliate the CEO's of the automakers was distasteful. I thought it was very unbecoming of a lawmaker.

That all being said, while I feel like this isn't something that happened overnight, but is probably something that has been 50-60 years in the making. It no one person's fault. Basically, shame on the lawmakers.

As for the automaker's, since Oct. 1973 in the aftermath of the Yom Kippur war and the oil embargo, Ford, GM, and Chrysler have known they've had competition, and they more or less haven't responded. Something that is amazing to me is with as little profitability as these guys have had over the past 20 years that they still paid out a dividend. That's money that could have been used to build modern factories and retire old obsolete factories, re-tool available factories, hire engineering talent to design better cars, branch out into new industries, and so on. I feel that this was money that was really wasted.

As bitter of a pill as it is to swallow, I think the auto makers should file for bankruptcy and reorganize, and ask themselves what they really need. The workers, as hard is it is to ask this of them, need to recognize that at current wage rates there are ZERO jobs, and need to accept lower pay. That also goes for the executives and salaried employees.

After talking a little tough, my sympathies are extreme with the workers. They are taking it on the chin for problems that weren't their causing. My thoughts and prayers are with them.

Posted by: bdstauffer | November 21, 2008 5:02 PM | Report abuse

If the big 3 go down approx. 1 million jobs will go down with them. Unemployment will rise to approx. 15%. The US will slip into depression and the Feds will be helpless.

Posted by: askgees | November 21, 2008 5:10 PM | Report abuse

Play by our rules is better than play by your own rules (said to AIG). Nancy Pelosie is the problem. Get her out of office. (yeah I know , it's too late, until the next election!)

Posted by: yard80197 | November 21, 2008 5:14 PM | Report abuse

Reid and Pelosi to set terms for GM, Ford and Chrysler... Of course one must remember that the UAW sets the terms for Reid and Pelosi

Posted by: commboss | November 21, 2008 5:16 PM | Report abuse

Pelosi and Reid are too stupid to suggest or recommend anything.

Posted by: birvin9999 | November 21, 2008 5:18 PM | Report abuse

How about NO salaries over 100k and $0 for the CEO, until we are paid back. I agree with the bail-out, but even more with the restriction. When thing are tight I tighten the belt or even do without, they can do the same.

Posted by: JamesHovland | November 21, 2008 5:29 PM | Report abuse

When all is said and done, where is congress's business plan for the next four years? I must have failed to read where congress is going to reduce staff and their salaries, drop free medical care, and actually start paying into social security. Pelosi also didn't mention the jet she uses to travel back and forth to California, when is she giving that up? Fair is fair and our congress needs to suffer along with the masses.

Posted by: surfer-joe | November 21, 2008 5:31 PM | Report abuse

Can we ask our elected leaders to act responsibly in helping the automotive industry move to more fuel efficient vehicles? First remove any cafe credits for foreign car companies. The cafe credit program has permitted these manufacuturers to have a significant advantage over domestics and is the principle reason for the objections by the industry to increased standards. Secondly, substantially increase the price of fuel through taxes. I realize the second point won't pass the populist test. But, as shown around the world and throughout history, high fuel prices drives consumer demand for fuel efficient vehicles. Increasing these taxes would take real leadership and political courage. Something that has happened in the past for example: LBJ with the civil rights and voting rights acts in 64 and 65.
Is the time now to ask Americans to sacrifice for our future? If imported oil is our greatest security threat, then gas should be $5 a gallon. We should look to change our entire fleet to more fuel efficient vehicles. Maybe America is not desperate enough, yet, for our leaders to do what must be done.

Posted by: realityvision | November 21, 2008 5:32 PM | Report abuse

Their business model is flawed and their own expert states that they would not be able to pay back the taxpayers the bailout money. Throwing good money after bad, is not the solution. They have to many legacy costs to be competitive and the only way for them to be competitive would be to shed those legacy costs in Chapter 11 re-organization. They touted the free market system, then they should live by the results of that market system which rewards those who have a successful plan and eliminates those that do not.

You are aware that if GM applies for bankruptcy they could dump their pension fund on the tax payer. The price of oil has nothing to do with GM's problems. If that were the case they would have been in trouble a year ago. I agree that the seem to lack the ability to prepare for the future but any company would have done the same thing. If there's a demand there will be a supplier. If GM didn't build the Hummer or any other number of larger trucks someone else would have built them. With that said GM would have even less operating capital because they wouldn't have made the money they did selling these autos. The info you have is coming from those who have directly been involved with the melt down and you think their telling you the truth now???? If their business model didn't work they wouldn't exist but for some reason they have been in business for over 75 years so that argument is moot. (And plain stupid) The UAW is the main reason the big 3 are in the position their in. GM, Ford and Chrysler will never be able to compete with Asian car makers as long as the UAW holds the cards. We the tax payer will end up subsidizing the Big 3 which actually means your subsidizing their work force. While you are hard at work making a tiny wage were all chipping in so Bob the tire guy for GM can make 80G's a year. This weakens the Big 3 as well as the entire country. Unless that is you don't mind (example) construction worker working outside making 18.00hr. while GM employees are hard at work inside bolting on wheels making 28.00hr. It would be nice if the tax payer subsidized all of us but they don't however as long as the UAW is involved that's what we doing.

Posted by: askgees | November 21, 2008 5:33 PM | Report abuse

Politicians like Pelosi and Reid unfortunately mean well but are not business people. The requirements that Congress will make upon the Big 3 is easy for them to do. A more realistic plan should include:

a. reduction of benefits, bonuses and stock options so the limit is $250,000 overall.

b. Employees and executives only have the right to buy vehicles at employee pricing. No more free vehicles, insurance and gas to anyone. This is a major expense for the auto industry.

c. Sell all corporate planes immediately. Stop this non-sense that executives require security and security-details like Lutz and others have. Nobody knows who they are in this secretive group - they can travel like everyone else - tourist or first class. Same for hotels. Again these are major expenses in the industry.

d. Stop paying independent health care for retirees eligible for Medicare. They can join Medicare HMO's which are great and this will reduce at least $750.00 car per cost.

e. Review all foreign contracts so that more work can be done in the U.S. with the new labor contract.

f. Put a qualified knowledgeable independent auto industry expert as an overseer at each company with ample authority to make sure all the mandates are done. Only allocate loan money as the above are done.

Posted by: 6947la | November 21, 2008 5:39 PM | Report abuse

what about nascar. what will we do?

Posted by: racerdude | November 21, 2008 5:44 PM | Report abuse

This is a good start.

The "Big Three" drove themselves into the ground by inflexibly locking themselves into being mostly nothing but producers of big trucks, SUVs, and luxury sedans. That isn't what the world needed at $4.00/gallon gasoline.

Sure, it's the most profitable product line in the industry, but if the Real World conditions aren't perfectly in line with a vanishing age of dinosaurs, the profit disappears along with sales, because nobody can afford to feed those white elephants, so to speak.

So, if Pelosi and Reid want to declare that the Big Three automakers can have the money so long as they only spend it on manufacturing efficient models appropriate to the vast majority of potential buyers, that's sort of like enforcing commonsense. You shouldn't _need_ to enforce commonsense, unless the lack of commonsense becomes madness.

Effectively the government is offering to bail out Detroit and pay its rent if it stops acting crazy.

I'm all for that.

Posted by: thardman | November 21, 2008 8:52 PM | Report abuse

Those "legacy costs" many of you refer to are the pensions and health care for a million of your fellow citizens who worked a lifetime to earn them. Is that the America we want? Taking money away from retirees and their spouses, the oldest only getting about $300 a month and social security, is that what we've been reduces to?

We spent $3 billion in taxpayer money to build factories for foreign manufacturers in the South but can't loan money to our own companies when they get caught up in a credit crisis not of their own making. Don't think that that's a "thriving industry" down their either. A hand full of assembly plants are just that. The design, engineering, testing and R&D are all done overseas.

Finally, if you think UAW workers are living high on the hog, I invite you to drive through Flint, Pontiac, Dearborn or Warren, Michigan. They all look just like the rest of Middle Class America. No better, no worse. That's my minimum standard of living for hard working Americans who play by the rules. I wonder what the vision of the middle class is for some of the posters on here.

Posted by: MrPike | November 23, 2008 8:53 PM | Report abuse

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