New York (HedgeCo.Net) – The debate on whether or not to grant the big three Detroit automakers billions in bailout funds continues as Democratic leaders set a timetable for the companies to present a “credible restructuring plan.”
In a letter sent Friday to GM’s Rick Wagoner, Ford’s Alan Mulally and Chrysler’s Robert Nardelli, Speaker of the House Nancy Pelosi and Senate Majority Leader Harry Reid outlined what the auto executives must do to receive the rescue they are desperately seeking.
"The American people – deserve to see a plan that is accountable to taxpayers and that is viable for the long-term," the letter said. The democratic leaders also insisted that the auto executives must be "making significant sacrifices and major changes to their way of doing business."
With the majority of media attention focusing on the fact that each of the three men flew private jets to Washington and proceeded to beg Congress for $25 billion in bailout money, “significant sacrifices” could mean perhaps flying commercial next time.
The letter states that the companies must provide a detailed assessment of their finances, along with a request for an amount that they feel would bring them to “long-term viability.” The December 2nd deadline leaves plenty of time for heated debates on what seems to be the most prevalent issue in the current economic crisis.
Some republicans, like Alabama Senator Richard Shelby, are reluctant to provide aid to what he feels is already a lost cause. In a recent CNN interview, Shelby argued that even $25 billion would not save the automakers. He went on to say that perhaps $50 billion or even $100 billion would not be enough. His take is that unless these companies have “new management, new innovation and new products,” they are going to sink, no matter how much of an infusion of cash they receive.
The Democratic leaders said the companies have failed to convince Congress that they have a coherent strategy to stay afloat once any funding was granted. The letter urges the automakers to bring to the table a long-term plan with reasonable objectives for repayment.
Should the companies receive any taxpayer-funded loans, those would receive “senior status,” meaning they would have to be paid off before any other company debt. The Democrats are hoping that Congress will reconvene the second week in December to decide if and how there will be a rescue package for the three automakers.
Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net
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