During a press conference a bi-partisan group of Senators including Michigan’s Carl Levin and Debbie Stabenow outlined an agreement just reached to enable government loans to General Motors, Ford and Chrysler, and in some cases to major automotive suppliers as well. Senate Banking Committee leaders and Automotive Caucus were also involved.
The Deal on Loans
Automotive Detroit ‘Big 3’ are to submit by December 2, 2008 individual "viability plans" including turn around actions and financial requirements as part of their potential applications for loans. Those plans from General Motors, Ford and Chrysler that must demonstrate the carmakers can become "economically viable" and pay the loans back to taxpayers, are to be submitted to the US Department of Commerce and will include "strong oversight" from Congress and the Department of the Treasury.
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Continues
Should there not be a vote today or tomorrow, the Senate is to reconvene on December 8, 2008 to review the "Viability Plans". Several members of the bi-partisan Senate group stated that the Automotive OEMs or manufacturers need to "not only persuade the Congress, but the American people. "
Rough 72 Hours for the Auto Industry
While Senate staffers and others ranging from auto company executives to industry consultants and subject matter experts worked through the night on the compromise that will focus on automotive OEM's providing their business cases to Congress, earlier in the day there have been a number of news stories and statements from key players saying that a deal for Big 3 loans or a "bail-out" was not going to happen this week.
Statements by Top Law Makers Earlier Today
Speaker of the House Nancy Polosi :
"It is all about accountability and viability. We need to see a plan where
the auto industry held can be accountable. Until they show us the plan, we
cannot show them the money."
Senate Majority Leader Harry Ried:
"Democrats are determined to help autoworkers in this very important
industry. The sad reality is that no one has passed a plan that can pass through
the House and the Senate and get signed by President Bush."
Later in the day...
"In light of the importance of this issue to all of us, we have decided that
the best way to proceed is to give the auto companies another opportunity to
make their case."
From the Press Conference Announcing a Senate Deal:
Michigan's Senator Carl Levin restated and the failure of any to the Big 3 could very well lead to a possible "depression" and that this was a "very, very important moment".
From Michigan's other Senator Debbie Stabenow called the current situation was about the "fundamentals of our economy" and that the current "global crisis" in the financial markets and manufacturing not only affects the US, but Canada and Europe" and that has "a ripple affect across the world." She also said that the failure fo the US domestic automotive industry would affect "millions and millions of people", and that something had to be done to save the companies that "created the middleclass."
Ohio Senator Sherrod Brown, also part of the news conference said the impact and cost of "inaction is too great", but he added the loan would lead to "needed structural changes" related to labor costs, executive compensation and the possible changes to OEM board members. He argued that allowing one or more of the Big 3 to got into bankruptcy would "cripple them" because no one would want to buy a car from a bankrupt company, an arguement that has not necessarily had much weigh thus far.
Backing away from the "Edge of a Cliff"
Despite the inability of the top automotive executives to communicate their case to both Congress and the American public, "cooler heads" appear to be prevailing as predicted by the Center for Automotive Research's Dr. David Cole and other industry insiders.
More later as more reports of the deal are made public...