Culture Car News
Congressional Democrats may have a $15 billion auto industry bailout proposal ready for a vote within 24 hours of yesterday. One Republican Senator has threatened a filibuster to prevent passage of the legislation, but it isn’t clear at this point whether his colleagues are willing to back up his words. White House and Congressional negotiators will spend today fleshing out the details of the bailout proposal.
The broad outlines of the bailout proposal are now clear. The plan is expected to offer between $15 and $17 billion in loans to General Motors and Chrysler, to be made available December 15. The two would have seven years to repay the funds – at an interest rate of five percent for the first five years and nine percent thereafter.
Ford is reportedly not included in the plan. The company has told Congress that it does not need federal assistance, but might if one of its rivals were to fail.
In exchange for accepting federal aid, the automakers would be required to submit to significant government oversight. A cabinet-level White House task force would oversee the companies’ recovery efforts, with veto rights over any transaction totaling $25 million or more.
The final sticking point in negotiations may be the structure of that board. The White House would reportedly like for President Bush to appoint a chairperson to oversee the Board’s efforts – a so-called “car czar” – before December 15. Congressional Democrats would like to disperse the funds first, but have the czar position take effect only after President-Elect Barack Obama takes office.
Automakers would also be required to limit executives pay, give the government a share of future gains, stop paying dividends and guarantee that taxpayers would be reimbursed first before any payments to shareholders could resume.
Accepting the cash might also cost the companies’ CEOs their jobs. Senator Christopher Dodd (D-Conn.), Chairman of the Banking Committee currently drafting the legislation, told CBS’ Face the Nation on Sunday, “If you’re going to really restructure this, you’ve got to bring in a new team to do this, in my view.” Asked specifically GM CEO Richard Wagoner, Dodd said: “I think he has to move on.”
More news on the Auto Bailout.
