The second session of US Congress bailout hearings took place today. Yesterday’s session was before the Senate Committee, today’s was in front of the House Committee.
From my reading of it, it seems like today’s was a shorter and less dramatic session and in terms of outcomes, it seems like there’s still no real indication as to when a solution might arise.
Let’s cover the proceedings in brief, first, and then some thoughts sent in on a possible outcome.
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There were two sites that I noted as having good live-blogging coverage of the hearings. The Detroit News, once again, provided great snippets throughout the day. The other good site was The Deal, which hd some excellent commentary.
A few highlights:
* Rep. Ron Klein, D-Florida, is proposing that Detroit’s Big Three consider combining their research-and-development operations into a single, perhaps publicly supported entity that he referred to as the auto industry’s “Manhattan Project.” All three CEOs supported the idea.
* Despite the lack of outcomes, there seems to be some optimism that something will get done, at least initially. The running theme I’m seeing is an initial bridge loan to get the big 3 through to the end of January, by which time a new President might be able to push things along a little.
Frank said the conclusion is sinking in that something must be done this month to help the Detroit 3 — even if it’s a smaller interim package that tides them over until next year. Then, a bigger loan package can be completed with stringent government oversight, milestones and possibly equity rewards for the risk of lending the money.
* As of Saturday, 240 Chrysler dealers have gone bankrupt because they couldn’t get funding, even with the government’s bailout of the financial sector, Chrysler CEO Robert Nardelli said. Another 250 dealers are on credit watch. Together, they represent 63,000 units, annualized, that are now gone from the system, Nardelli said.
* One of the house members wisely noted that running a committee is nothing at all like running a car company. Many eyes rolled, I’m sure.
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Am I the only one who thinks there’s a fair bit of show going on here, and not as much go as there should be? Some of the joking that I’ve read about, and the whole performance of driving the last two miles of the trip in a Volt prototype…… I think the CEOs, not that I feel sorry for them, but they’re being treated like naughty kids in some aspects, and this coming from securely employed politicians who are enjoying their time in front of camera.
That’s how it seems to me, viewing from afar.
The Deal noted some similar thoughts:
Trying to wrap things up, perhaps it is best to quote Rep. Al Green (D-Texas, not the singer), who in urging his colleagues to support the bailout notes that the automakers have done everything that was asked by them by lawmakers.
“They have done everything except roll over and play dead,” Green said. “And I suspect if we had asked them to roll over and play dead, someone would have been willing to do it.”
Shame Bob Nardelli has already left. The image would be priceless.
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So, to the bottom line (for today)…
It looks like GM will get some sort of bailout, but on a smaller scale than expected with some pretty rigorous goals to be met along the way.
It looks like there’s going to be some sort of oversight in place to assess how things are going and feed these assessments into future considerations for further funding.
It looks like the big picture is going to get passed on to the next administration to address.
It looks a little like a combination of proposed micromanagement and a game of hot potato.
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Some thoughts from RJ, in Utah. I think these tie in pretty well with Barney Frank’s thought’s, which were noted above in a quote from Automotive news.
A local radio station was interviewing Senator Bob Bennett of Utah, a member of the Senate Banking, Housing, and Urban Affairs Committee. He’s waist deep in the crap like everybody else, I suppose, but he seems to have his head on straight as far as the technical knowhow and procedures go.
At any rate, his main point was this: Congress is still not close enough to accepting even in principle the auto makers’ proposals, which also need more work to be done. More importantly, he said there isn’t anyone yet who has even begun to draft a bill for legislation that would provide assistance to the industry. And that takes some serious time to do. Therefore, as he says, it’s very unlikely any sort of conclusion will be reached before Congress’ holiday break. What does this mean?
Well Sen. Bennett indicated that the problem will most likely be put back into Henry Paulsen’s lap, and therefore the big automakers will have to plead their case all over again to him. He was given the authority from Congress through the, uh, Temporary Relief Act, or some similarly named bill (I think that’s the troubled assets revovery program, or TARP, but I’m guessing – SW), which I believe they recently passed for the purpose of this current economic struggle.
Soo….I think it will be interesting to see how GM manages to raise cash if it’s really going to run out before year’s end, especially since the Administration will have to decide to deal or not deal with it, and then we’ll see what the new Administration does once it’s in. That is, if GM makes it that far…
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