Bailout Watch 71: Dissenting Voices Lost in the Spin Cycle
As we’ve just reported, the Senate’s OK’ed a big ass appropriations bill which included $25b low-interest federal loans for Detroit [via the Department of Energy, with an initial five-year payment holiday]. While the bill passed by a convincing margin, and the lame duck President is sure to sign it, the increasingly vociferous fiscal conservatives are starting to make themselves known. Automotive News [sub] reports the dissent. “Sen. Jeff Sessions, R-Ala., warned that loans to the industry could violate international trade agreements that restrict government subsidies for private businesses. Sen. Jon Kyl of Arizona, the Republican whip, said that features of the loan program are ‘eerily familiar’ to easy-credit practices among home lenders that led to the nation’s current financial crisis.” In a pre-written acceptance speech (’cause the suits are home for the weekend), GM highlighted the loans’ non-bailout, PC nature. “Congress clearly recognizes the need to move forward at this critical time to make available this source of capital for automakers and suppliers. Authorized nearly a year ago, these direct, federal loans will support advanced technology development and implementation and will help speed the transition to cleaner, more fuel-efficient vehicles.” As would a consumer credit for consumers who bought a fuel efficient vehicle from ANY automaker.
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RF: C11 is a given for one or more of these companies, its just a matter of when. The rate at which each of them is burning cash is alarming. SO, when I used "may", it is because I'm not even sure the bailout will delay C11.
The money is nothing other than corporate welfare. And yes, if you own a company, insurance is great. You get to choose the plan! OTOH, the whole structure of the system of having your insurance based at your job is just stupid. The health savings accounts and the tax credits to individuals are just means to a desirable end of separating health insurance from the work place. Most people hate it when their company tells them what cell phone and service to use, yet they really want the boss to pick their health insurer? Right.
$25 billion in loans isn't going to help considering the big wall street bailout just failed - meaning nobody's going to be able to borrow money to buy ANYONE's cars. It will just delay the inevitable.