White House considers auto rescue

The White House says it is considering using money earmarked to rescue the US banking industry to bail out the country's struggling automakers.

A $14bn (£9.4bn) bail-out deal for the US car industry failed to get Senate support, raising fears of job cuts and a possible industry collapse.

The White House said that the US economy could not withstand a body blow like the collapse of the auto industry.

The Federal government may have to step in, a spokesman added.

'Irresponsible'

Earlier this year, the US approved a $700bn (£467bn) bail-out for the finance industry, known as the TARP programme.

It had previously been reluctant to use this money for other industries but White House spokeswoman Dana Perino said it would consider other options, including the use of the TARP program, to prevent a collapse of troubled automakers.

She added that it would be "irresponsible" to further damage the economy by allowing the Detroit car companies to fail.

"The current weakened state of the economy is such that it could not withstand a body blow like a disorderly bankruptcy in the auto industry," she added.

President-elect Barack Obama said he was disappointed that the Senate failed to act, adding that "millions of jobs rely directly or indirectly on a viable auto industry".

"My hope is that the administration and the Congress will still find a way to give the industry the temporary assistance it needs while demanding the long-term-restructuring that is absolutely required," he said.

'Devastating'

The Big Three - Chrysler, General Motors and Ford - employ 250,000 people directly, and many more indirectly, in companies making auto parts and car dealerships.

The United Automobile Workers (UAW) union on Friday warned that if a bail-out was not forthcoming, the result would be "devastating."

The union's president, Ron Gettelfinger said he was confident that there were "enough sane" people in Washington to find a solution despite the Senate's defeat of the bail out bill.

Tense and emotional

The White House had said the plan was American carmakers' "best chance to avoid a disorderly bankruptcy".

Shares fell sharply around the world after the bail-out was rejected - with carmakers among the hardest hit. General Motors fell 10% while Ford lost 7% in early trading.

In Asia, stocks in Toyota, Honda and Nissan all lost at least 10%.

The Republicans refused to back the bail-out after the UAW union refused to cut wages next year to bring them into line with their Japanese counterparts. UAW's current contract with the car makers expires in 2011.

"We were about three words away from a deal," said Republican Sen Bob Corker. "We solved everything substantively and about three words keep us from reaching a conclusion."

The BBC's Andy Gallacher in Washington said it was always going to be a battle to get the US Senate to approve the $14bn bridging loan.

With a majority of just one in the Senate, the Democrats needed some Republicans to back the bill as some in their own party were expected to vote against it.

The atmosphere in the Senate was tense and at times emotional, our correspondent says, as the Democrats made last-minute pleas to get their Republican counterparts to vote in favour of helping America's biggest car domestic makers, Ford, Chrysler and General Motors.

Millions affected

The failure of the bail-out raises the prospect of huge job losses.

The Senate majority leader, Harry Reid, said he was "terribly disappointed" when it became clear the vote had collapsed, calling it "a loss for the country".

"Millions of Americans, not only the auto workers but people who sell cars, car dealerships, people who work on cars are going to be directly impacted and affected."

The deal would have given the Big Three carmakers access to emergency funding to help them cope with the sharp downturn in sales because of the global financial crisis.

General Motors and Chrysler have said they risk ruin without immediate aid. Ford says it may need funds in the future.

The bosses of the three firms had previously asked for $34bn from Congress.

They have all seen sales fall sharply this year in the US, partly reflecting an industry-wide fall, and partly because their large gas-guzzling vehicles are no longer what customers want.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7779981.stm


I am torn on this issue. I was totally against the bailout and I am not really for "rescuing" the Big Three with billions of dollars. But I would rather see American jobs saved than money go to banks that are showing they are not unfreezing the credit market or attempting to assist the economy. Instead, banks are raising interest rates, not giving loans to long-time, good -standing customers, cutting jobs to increase profits, and shoring up funds for later. At least if you take some of the money to help the Big Three, we might see some good come of it. Help me with some other perspectives guys.

**I will reiterate again too, the Bank Bailout was a terrible idea .**

Big Three auto CEOs flew private jets to ask for taxpayer money

By Josh Levs
CNN

(CNN) -- Some lawmakers lashed out at the CEOs of the Big Three auto companies Wednesday for flying private jets to Washington to request taxpayer bailout money.

"There is a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hand, saying that they're going to be trimming down and streamlining their businesses," Rep. Gary Ackerman, D-New York, told the chief executive officers of Ford, Chrysler and General Motors at a hearing of the House Financial Services Committee.

"It's almost like seeing a guy show up at the soup kitchen in high hat and tuxedo. It kind of makes you a little bit suspicious."

He added, "couldn't you all have downgraded to first class or jet-pooled or something to get here? It would have at least sent a message that you do get it."

Rep. Brad Sherman, D-California, asked the three CEOs to "raise their hand if they flew here commercial. Let the record show, no hands went up. Second, I'm going to ask you to raise your hand if you are planning to sell your jet in place now and fly back commercial. Let the record show, no hands went up."

The executives -- Alan Mulally of Ford, Robert Nardelli of Chrysler and Richard Wagoner of GM -- did not specifically respond to those remarks. In their testimony, they said they are streamlining business operations in general. 

When contacted by CNN, the three auto companies defended the CEOs' travel as standard procedure.

Like many other major corporations, all three have policies requiring their CEOs to travel in private jets for safety reasons.

"Making a big to-do about this when issues vital to the jobs of millions of Americans are being discussed in Washington is diverting attention away from a critical debate that will determine the future health of the auto industry and the American economy," GM spokesman Tom Wilkinson said in a statement.

Chrysler spokeswoman Lori McTavish said in a statement, "while always being mindful of company costs, all business travel requires the highest standard of safety for all employees."

Ford spokeswoman Kelli Felker pointed to the company's travel policy and did not provide a statement elaborating.

But those statements did little to mollify the critics.

"If it is simply the company's money at stake, then only the shareholders can be upset or feel as it it might be excessive," said Thomas Schatz, president of the watchdog group Citizens Against Government Waste.

But in this case, he said, "it's outrageous."

"They're coming to Washington to beg the taxpayers to help them. It's unseemly to be running around on a $20,000 flight versus a $500 round trip," Schatz added.

The companies did not disclose how much the flights cost.

Analysts contacted by CNN noted that the prices vary with the size of the plane and the crew, and whether the aircraft is leased or owned by the company.

Analyst Richard Aboulafia of the Teal Group said that $20,000 is a legitimate ballpark figure for a round trip corporate jet flight between Detroit, Michigan, and Washington.

When asked whether they plan to change their travel policies as part of the restructuring needed to shore up their finances, none of the companies answered directly. But they said they have cut back on travel in general as revenues have fallen.

No No No No No No No No NOOOOOOOOOOOOOO. My God. 

No.

Listen, while it doesn't sit well with me, I at least understand the reasoning behind saving our financial institutions (which looks as if it's turning into  a huge clusterfuck anyway) , seeing as how their failure would have serious global repurcussions. But the automakers? I'm sorry, no fuggin way. Absolutely not.

Declare bankruptcy and restructure, like every other business that has been run into the ground by poor business decisions and/or hard times. The bottom line here, in my mind, is that you should reap what you sow. The Big Three have leaned on "the American brand" too long, and now they simply cannot compete with foreign competition. Compete, motherfucker, compete! Strive to excel, or find another fucking line of work! 

And the UAW is equally culpable, bleeding the stone dry by demanding ridiculously high salaries and unsustainable benefit packages for its members. By god, as difficult as it is to find affordable benefits for my *own* family, I'll be damned if a single tax dollar of mine is going into the retirement fund of a union worker who is already making $80/hr for plugging in tail lights, or into the gas tank of some CEO's private jet as he flies to Washington to beg for a bailout. Fuck that! 

And do you know what's even worse? The Democratic leadership in congress are going to bat for them! What the fuck is WRONG with people?!?! 

I don't often post in serious outrage, but I can feal my blood boiling as I type. I'd better quick before I throw my mouse out the window.