Seeking $25 Billion, Big Three to Get a Second Chance on the Hill
Saturday, November 22, 2008; Page D01
In just 10 days, Detroit's Big Three automakers hope to re-plead their case for a $25 billion emergency loan. But this time they will be expected to produce clearer business plans.
The letter came a day after congressional leaders delayed a vote on providing the auto industry as much as $25 billion in emergency aid.
President Bush, in his weekly radio address, castigated Democrats for failing to vote on an alternative proposal to let automakers instead tap $25 billion in loans that are supposed to help them improve the fuel efficiency of their cars.
"If the automakers are willing to make the hard decisions needed to become viable, they should be able to receive the funds Congress already allotted to them for other purposes," Bush said. "The American people expect their elected leaders to do what it takes to solve it."
Pelosi and others have said there was not enough support in Congress to provide funding without a detailed turnaround plan.
"We don't have any intention of seeing the auto industry go down, but they have to come up with how they survive themselves," Pelosi told reporters yesterday.
Pelosi and Reid laid out a number of requirements for a restructuring plan that would generally answer three questions:
1. How will the $25 billion be spent and paid back?
In testimony this week, the automakers told Congress they intend to split the $25 billion emergency loan roughly along the lines of their share of the U.S. market. GM, being the largest, would get about $10 billion to $12 billion. Ford and Chrysler would take about $7 billion to $8 billion each.
Asked by Sen. Richard C. Shelby (R-Ala.) how they intended to pay back the loan, Chrysler chief executive Robert L. Nardelli said the automakers hoped the money would buy them time to transform their businesses.
"We wouldn't be here today asking for this if we didn't have a high confidence level that we could weather this economic trough, continue to resize, make these gut-wrenching decisions to come out the other side leaner, more agile, and for us, a higher quality, higher-reliable product," he said.
Yet some industry analysts said GM alone may need as much as $30 billion next year to deal with a cash shortfall. Pelosi and Reid are asking the automakers to provide "documented assessments" of their current financial positions and to outline their plans for meeting health-care and pension obligations. They want estimates for when the loans would be repaid under varying auto sales conditions.