House Passes Auto Rescue Plan
By Justin Gardner | Related entries in Business, Cars, Money
Even 18% of Republicans supported it, and I thought that would be much lower. Of course, when you think about all the representatives from those Midwest states that need these jobs, maybe that number isn’t all that surprising.
The House just passed the $14 billion Detroit Big Three autos bailout bill by a vote of 237-170, sending it to a Senate where approval is no slam-dunk, thanks to the promised opposition of leading Republicans.The bill was overwhelmingly endorsed by Democrats (205-20) and strongly opposed by Republicans (32-150).
The money provides nearly instant emergency bridge loans to GM and Chrysler at a low, low introductory rate of 5 percent. Ford said it doesn’t need the money right now but wants to be able to tap it if the economy worsens.
The one thing that kind of burns me in all of this is how people are demanding that we not give the car makers any money…and yet the money that lawmakers are voting on had been appropriated for them anyway…
The money is a repurposing of $14 billion of $25 billion in direct loans already approved to the automakers to help them retool their factories to make more fuel-efficient vehicles.
And guess what they’ll do with this money? Oh, I don’t know, maybe retool their factories to make more fuel-efficient vehicles?
So how was this wrong again?
This entry was posted on Thursday, December 11th, 2008 and is filed under Business, Cars, Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
December 11th, 2008 at 6:20 am
Actually, I do not think that is accurate to say that the money they are using was already going to them to retool to make more fuel efficient vehicles. The Washington Post got that wrong.
First, a lot of companies that are not the big three were looking at that money to help them retool so they can provide the Big 3 with technology and products–it was not really designed strictly for the Big 3 (hence the reason the Big 3 needs to pay this money back fairly quickly).
But more on point, the Big 2 are seeking a loan not to retool anything, but to bridge the gap between money going out and money going in. Thanks in large part to the poor practices of the financial markets, their is no credit that the Big 3 would normally use to borrow money to allow them to continue to pay suppliers and ride out the hard times without shutting down.
It is actually fairly common for the Big 3–and many other businesses– to take short term loads so they can pay bills and workers and continue operations. The $25 to $35 billion was larger than normal, and since most of the larger banks and money houses have tightened credit, there really is no choice but to go to the government.
December 11th, 2008 at 6:35 am
Let’s be serious, they’re not going to “invest” this money in new technologies, because they’re going to need to use it for operating expenses.
GM and Chrylser are bleeding cash at a rate that, in a rational universe, would lead them straight to Chapter 11 where they belong. Giving them this money is the financial equivalent of putting a finger in the dyke to stop a flood.
December 11th, 2008 at 1:13 pm
The last bailout we approved — the one for the banks — was intended to give banks enough latitude to be able to give credit again. However, many banks didn’t do that; in some cases, bailed-out banks bought other banks instead. That sure didn’t leave extra funds floating around to secure credit.
So if there was a $25b lump already approved for “retooling”, and after lots of begging $14b of it is now freed up for any application, why would they use it for that?
Not to mention that we could have nationalized the auto industry for far less money.
December 11th, 2008 at 3:55 pm
If they take the bailout – Boycott GM and Chrysler. Buy a Ford….
Last night, the House of Representatives voted 237 – 170 to pass the Federal Auto Loan Bill. As I write this, the Senate is debating the bill….