Bailout Watch 16: How Much Was That Again?
As Farago reported, the amount of federal money Motown would need to turn its business around– if money was, indeed, the determining factor– far exceeds the $25b first mooted. Or the $50b since suggested. And now, having floated not one but TWO trial balloons, Ford, GM and Chrysler are playing coy about the ballooning balloons. To its credit, The St. Louis Dispatch has tried to nail down the exact numbers and conditions, to see if their local minivan plant could be saved. "'We know the legislature authorized up to $25 billion, but the amount that could really make a difference likely is much higher,' GM spokesman Greg Martin told the Post-Dispatch. He declined to say how much additional money would be needed or confirm the $50 billion figure. Ford spokesman Mike Moran also did not confirm the increased loan amount. Chrysler spokeswoman Katie Hepler said the automaker is working to access the government loans. She declined to talk about specific dollar amounts or elaborate on where Chrysler would use any money it borrowed." And here's a surprise. "It also appears that some of the older plants owned by foreign automakers could apply for this loan, according to the original language of the legislation. Toyota Motor Corp.'s Georgetown, Ky., plant and Honda Motor Co.'s Torrance, Calif., location are two that fit the criteria." Only… The Department of Energy has until December to write the final rules that detail how to apply for the money.
Unless the government puts tough rules and strong audit processes in place the bailout money will go to executive compensation, VEBA payments, and creditors in that order. Automakers will need another bailout to actually produce cars, which the public probably won't buy.
Maybe we should put all the VEBA money in Toyota stock. It's bound to go up when the 2.8 fail.
Why not go through chapter 11 first and then talk about a bailout loan.