fort wayne right Weblog



Posted by zeakster on December 5, 2008

HOWEVER  he fails to fess up on how he and his buddies caused the trouble to begin with.


WASHINGTON (Reuters) – Efforts to help U.S. automakers were gridlocked on Friday and a senior U.S. lawmaker warned of an “unmitigated disaster” if a major U.S. automaker were allowed to collapse at a time when the economy is losing jobs at an alarming pace.

With new data showing U.S. employers axed more than 533,000 jobs in November — the highest monthly job-loss in 34 years — Rep. Barney Frank urged the White House to use money from a $700 billion bank bailout program to assist Detroit.

But President George W. Bush stuck by his administration’s position that Congress should help by modifying a $25-billion Energy Department program to develop more fuel-efficient vehicles.

The chief executives of General Motors Corp, Ford Motor Co or Chrysler Corp ended their second day of testimony to lawmakers on Friday, leaving town without any clear path to $34 billion in loans they are seeking.

Frank, the Massachusetts Democrat who chairs the House of Representatives Financial Services Committee, said the economy would be devastated if an automaker were forced into bankruptcy or shut down.

“In the midst of the worst economic situation since the Great Depression it would be an unmitigated disaster,” he said.

The Wall Street Journal reported that Chrysler, thought the most fragile of the three, has hired the Jones Day law firm as its bankruptcy counsel.

While many lawmakers are anxious to see the companies survive, Republicans have been more wary of whether the money would really help, and Democrats have been more inclined to be generous to the huge employers of unionized labor.

KeyBanc Capital Markets Senior Automotive Analyst Brett Hoselton said, “We continue to believe there is a better than 50 percent probability something gets done (to aid automakers).”

GM and Chrysler want immediate loans to forestall possible failure, while Ford is asking for a $9 billion credit line that would be tapped later if necessary. GM wants $12 billion in loans, with $4 billion of that immediately, as well as a $6 billion credit line. Chrysler wants $7 billion.

Chrysler CEO Bob Nardelli told Frank’s panel that the company needs $4 billion to run operations through March. Over the same time frame, GM CEO Rick Wagoner said his company needs $10 billion to keep going.

Ford CEO Alan Mulally said again that his company does not immediately need to use federal funds.


The White House refuses to carve out for Detroit some of the $700 billion bailout it is already showering on Wall Street and the banks, saying that money is intended only to help stabilize the financial sector.

Bush said he was concerned about taxpayer money going to companies that may not survive but said modification of the fuel-efficiency loans could help worthy auto companies.

“It is important that Congress act next week on this plan,” he told reporters.

Congressional Democrats insist the administration should help the automakers with money from the bank bailout — the Troubled Asset Relief Program (TARP).

Michigan Republican Rep. Thaddeus McCotter proposed a $25 billion automaker bridge loan drawn half from the TARP and half from the Energy Department program.

Asked about such a compromise on Thursday, Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, called it “a reasonable idea,” although just one of many.

Under McCotter’s proposal, Congress also would refuse to release the second $350 million in TARP funding and compel the CEOs of financial institutions benefiting from the TARP to appear before Congress to testify.

U.S. employers cut the most jobs in November since 1974, the Labor Department said on Friday. The unemployment rate rose to 6.7 percent from 6.5 percent in October.

On a combined basis, GM, Ford and Chrysler have cut more than 100,000 factory jobs since sales began to slow in 2006.

GM said on Friday it will lay off 2,000 unionized workers and eliminate a production shift at three plants in Michigan, Ohio and Canada.

“This is about survival at this point in time. There’s going to be, unfortunately, (job) losses,” United Auto Workers President Ron Gettelfinger told lawmakers.

“We can’t sugarcoat it, we can’t stick our heads in the sand,” said Gettelfinger.

Shares of GM were up 0.7 percent to $4.14 in afternoon trading, while Ford was up 1.5 percent to $2.70, both on the New York Stock Exchange. Chrysler is owned by private equity firm Cerberus Capital Management.

(Reporting by John Crawley, Kevin Drawbaugh and Karey Wutkowski, with Kevin Krolicki in Detroit; Editing by Tim Dobbyn)



  1. The Dow Jones industrial average closed below 8,000 today for the first time since 2003 after poor economic news was compounded by the release of minutes from the Federal Reserve’s last meeting showing its leaders expect economic conditions

  2. zeakster said


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: