TBO.com - TBO is Tampa Bay Online

Big 3 Face Tight Deadline

ADVERTISEMENT

The Associated Press

Published: November 24, 2008

WASHINGTON - When Chrysler teetered on the brink of bankruptcy in 1979, the automaker spent months building support for a $1.5 billion loan guarantee that helped save the company and tens of thousands of jobs.

Nearly 30 years later, the U.S. auto industry is getting only weeks to make its case.

Still, the Chrysler chapter offers lessons to the executives of General Motors, Ford and Chrysler - the private equity successor to the Chrysler Corp. - as well as the United Auto Workers union as they try to win support in Congress for a stalled $25 billion rescue plan.

Chrysler's predecessor secured the loan guarantees because labor, management and other stakeholders all made concessions, analysts and lawmakers said. The company benefited from the salesmanship of its chairman, Lee Iacocca, as well as a broad coalition of supporters and a more dominant hold of the domestic market.

Contrast that with the two days of high-profile hearings this past week when automakers stumbled and congressional leaders told them to come back after Thanksgiving with a better case.

OBAMA'S POSITION

•Daniel Axelrod, a senior adviser to President-elect Barack Obama, warned Sunday that American automakers will have to come up with a plan to restructure before the industry receives a federal bailout.

•Former Commerce Secretary Bill Daley, another Obama adviser, said, "The responsibility is on the auto industry and the unions to come back with a plan."

•Neither of the Obama advisers Sunday offered any guidance on the thresholds automakers would have to meet to establish credibility for reform plans.

•Obama has advocated accelerating a $25 billion loan that Congress had authorized for automakers to retool and manufacture more energy-efficient cars.

McClatchy-Tribune and The Associated Press

AUTO INDUSTRY AND WALL STREET

•Detroit automakers owe more than $100 billion to bankers and bondholders.

•During the past three years, big banks like Bank of America, Citigroup and JPMorgan Chase helped the automakers sell more than $56 billion in new debt securities.

•Most of those securities were bought by such investors as insurance companies, pension funds and hedge funds.

•That figure does not include $47 billion in risky loans made to various affiliates of Chrysler, Ford and GM that are backed by auto leases and car loans to individual buyers.

The New York Times

CONGRESS' POSITION

•Leading Democrats expect U.S. automakers to next month show Congress why they are worth rescuing and that they are capable of returning to global pre-eminence.

•Skeptical Republicans said Sunday that Detroit's Big Three needed to convince taxpayers that they deserve an emergency $25 billion lifeline.

•Congressional hearings are expected the week of Dec. 1 and lawmakers could consider legislation a week after that if they are satisfied by the companies' responses.

•Executives from Detroit's Big Three were ordered to provide Congress by Dec. 2 with a detailed accounting of their financial condition and short-term cash needs, as well as a plan for long-term viability.

The Associated Press

AUTO INDUSTRY AND WALL STREET

•Detroit automakers owe more than $100 billion to bankers and bondholders.

•During the past three years, big banks like Bank of America, Citigroup and JPMorgan Chase helped the automakers sell more than $56 billion of new debt securities.

•Most of those securities were bought by investors like insurance companies, pension funds and hedge funds.

•That figure does not include $47 billion of risky loans made to various affiliates of Chrysler, Ford and GM that are backed by auto leases and car loans to individual car buyers.

The New York Times

CONGRESS'S POSITION

•Leading Democrats expect U.S. automakers will show Congress next month they are worth rescuing and are capable of returning to global pre-eminence.

•Skeptical Republicans said Sunday that Detroit's Big Three needed to convince taxpayers that they deserve an emergency $25 billion lifeline.

•Congressional hearings are expected the week of Dec. 1 and lawmakers could consider legislation a week after that if they are satisfied by the companies' responses.

•Executives from Detroit's Big Three were ordered to provide Congress with a detailed accounting of their financial condition and short-term cash needs, as well as a plan for viability over the long term, by Dec. 2.

The Associated Press

Loading Comments...

Email Print

ADVERTISEMENT