Bailout Watch 67: No Money 'til 2010
Imagine Rick Wagoner, Alan Mulally and Bob Nardelli’s displeasure when they open this morning’s Detroit News and read the “ Government May Delay Auto Money.” While you’d hope The Big 2.8’s CEOs knew this before now, it’s still pretty sobering stuff. “We have significant doubts about whether distribution of [$25b worth of federal low-interest] loans by January 2009 is realistic,” Department of Energy (DOE) spokesman Healy Baumgardner warned. “There are a number of legal and administrative requirements with which the Department must comply, such as the National Environmental Policy Act, we anticipate it could take at least 6 to 18 months or more, after necessary funds are appropriated.” Beaumgardener’s remarks unleashed John Dingell’s ire. “It appears that DOE is making excuses for its own anticipated failures,” pronounced the chairman of the House Energy and Commerce Committee. “This is unacceptable; this investment is too important to Michigan for the Department of Energy to drag their feet,” U.S. Rep. Mike Rogers, R-Brighton pronounced. Instead of asking for a federal bailout, Detroit calculated they could alter the DOE “retooling” loans to suit their needs AND get the cash pronto. In this, as in so many other things, they may be entirely, disastrously wrong.
Somehow I never saw this coming. Apparently Congress either a) stupidly believed this wasn't a bailout and will pay the consequences or b) knew it was a bailout and wanted a politics-free way of saying "screw you". Because these companies won't be around long enough to collect this money unless they declare Chapter 11. Excellent job, Democratic Congress. Hopefully a decent company will give these workers new jobs.
2010 is the perfect time. After all, then it will be midterm elections and the politicians can use it for political mileage.
Good. Hopefully at least one of them go belly up and the other two will emerge stronger and worthy of our investment. I wouldn't mind much if either Chrysler or GM filed C11 before these loans hit. I don't think Ford's in danger with their cash hoarde (although, depending on Ford Credit's fortunes, things might get tougher).