Editorial: Bailout Watch 220: "We'll Be Back;" Chrysler's Dead; Where's Barack? Here's the Bill

Robert Farago
by Robert Farago
editorial bailout watch 220 we ll be back chrysler s dead where s barack

The table of Motown’s CEOs facing Senator Christopher Dodd at today’s Senate Banking, Housing and Urban Affairs Committee Hearing looked more than a little like The Last Supper. If only. When Senator Bob Corker (R, TN) pressed Ford, Chrysler and GM’s top suits for a pledge that they won’t be back for more money– should they be granted $25b in taxpayer-backed loans– only GM CEO Rick Wagoner answered. And then Red Ink Rick waffled, pegging his promise to an economic upturn that no one believes imminent. It was the moment when Motown’s begging bowl brigade went seriously south, in that oh-so-public C-Span sort of way.

Which means, of course, that here in the realpolitik world, that the $25b “bridging loan” lives. To die another day? Given the weak support doled-out by Senator’s Dodd’s ostensibly rubber-stamp-equipped committee, yes. I mean, most of the Senators peering over their granny glasses at the captains of the automotive industry were Democrats. If the blue staters are questioning their union supporters’ right to suck on the federal teat, clearly there are political potholes the size of Manhattan ready to swallow-up Detroit’s last, best hope for survival. However temporary.

At some point in this televised debacle, Senator Corker asked United Auto Workers boss Ron Gettelfinger to rate the three domestic automakers in terms of likelihood of survival. With omerta-dismissing insouciance, displaying none of the political skills for which politicians are famous, Big Ron put the The Big 2.8 in their place. Surprise! Ford, Chrysler and then GM. Which was the exact opposite order in terms of who wants what from this $25b honeypot. Chrysler’s Bob Nardelli put his hand up (our hands up?) for $7b, Ford’s Alan Mulally saw Boot ’em Bob’s seven and raised it a bil (ish) and GM went all-in at $10b – $12b.

Oh, did the overpayment of CEOs man-up. as suggested by TTAC Ken Elias? When offered the chance by Senator Jon Tester (D-Mont) to pull a Lee Iaccoca (i.e. work for a $1 until the public “investment” in The D2.8 is paid back), only ChyCo’s Nardelli agreed. Woo-hoo! The failed exec who pocketed $210m for NOT working at Home Depot knows the value of PR. [Note to Tester: get it in writing.]

Yes, well, this is the same automotive CEO who’s finally been forced to reveal his employer’s financial health, and flat-lining just about describes it. Nardelli admitted that the ailing American automaker is on track to burn through $5b to $7b in cash in 2009. Or not. Deduct the $5b in readies that ChryCo’s consumed in the first three quarters of 2008, including $3b in the third quarter, and the company’s already below “keep the lights on” minimum liquidity.

More precisely, Nardelli said that Chrysler ended the third quarter with about $6.1b in cash. In other words, Cerberus’ automotive venture looks set to join GM in the “DOA by New Year’s” club. Nardelli almost winced when Corker suggested ChryCo didn’t have a pulse. But not quite.

Also in the doghouse: the D2.8’s new BFF Ron Gettelfinger. In his opening remarks, Big Ron made a big mistake: raising the issue of the “money for nothing and your checks for free” UAW jobs bank. The union boss said his brothers and sisters had sacrificed hundreds of goats 50 percent of their pay (not strictly true, it’s now a two-tier pay deal) and “virtually eliminated” (ipso facto not strictly true) institutionalized feather-bedding.

When Senator Corker asked Ronny G how much his members would be paid for not working at a closed factory, the union guy feigned ignorance (95 percent of full pay, BTW). “That’s incredible,” Corker said, providing a pregnant pause in which his outraged incredulity could mature.

After the committee called it a day, Senator Dodd met the not-so-adoring throngs called the Washington Press Corps. His words must’ve sent a chill up Detroit’s collective spine. “My sense is that between inaction and writing a (blank) check, there is a ground I think you can build a majority for. We’re not there yet. Trying to jam something through, I think, would be a mistake.” Or, as Chrysler and GM call it, “a life-saver.”

The bottom line: despite (because of?) its desperation, the Detroit “bridge” is still under construction. Republicans have enough votes to torpedo the legislation, and their constituents are plenty pissed-off at the rush to judgement on the $700b Wall Street bailout. So where’s Barack Obama stand on the bailout? After all, the president-elect is still a– no, wait. He resigned. So although he’s officially pro-bailout, Obama’s not stupid enough committed enough to waste waste his political capital rescuing Detroit from itself. What about the union votes that sealed the election? As another blogger put it, if you want a friend, buy a dog. Not, apparently, a president.

[ Click here to read a copy of the Senate “Direct Bridge Loan” bill]

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2 of 32 comments
  • 50merc 50merc on Nov 19, 2008

    97escort, the way you keep mentioning Iraq, it must be your bete noire. Allow me to clarify things. "And hundreds of billions for Iraq are spend with barely a second thought." No, the authorization to go in and the subsequent appropriations were all extensively debated in Congress. "Oh, that’s right, they are not Americans so they deserve it." Apart from the fact that most of the money went directly to or for support of the men and women who fight our wars, Iraq "deserved it" because a stable and non-threatening Iraq was judged important to US and global interests. "Just pour more money down a rat hole. There’s plenty more if needed. Mission accomplished." The war in Iraq has been won, so in that sense, yes, mission accomplished. The objective now is to keep threats from re-emerging (mostly from Iran and its ally/proxy, Syria) while Iraq's new governmental and defense institutions mature. That process has been followed in many places where our military was engaged.

  • 928sport 928sport on Nov 20, 2008

    Buying a new car and having problems with it is like having your spouse cheat on you, you never forget,The years of cutting corners has come home now, it is vary hard to get back the trust once you have lost it.So for all you bleeding hearts out there, send your checks to Motown and feel that you did your part.I will never buy a UAW built car again.And for the one's that think that is unamerican,well how many foreign made products do you have in your home?

  • Tassos The EQS is the best looking BEV, better than even the only Tesla I would ever consider (the S) and more luxurious inside etc etcThe self driving features will come in handy when I'm 110 and my eyesight and reaction times start to suffer.But that's four decades away, and only Tim recommends 40 year old "used cars"
  • Tassos "Baby, Baby light my fire!""Oh God please give me a Kia Forte" --Janis Joplin
  • Tassos The fugly looks of any Subaru, and especially the non-sporty non-elegant, fugly, low-rent looks and interior of the WRX are alone a sufficient turnoff to never want to own one.One can be a 100% car enthusiast but ALSO demand a beautiful AND luxurious vehicle one can be truly proud of and which makes one very happy every time one drives it.The above is obviously totally foreign to Subaru Designers and managers.
  • Thehyundaigarage Am I the only one that sees a Peugeot 508?
  • Lou_BC I realized it wasn't EV's burning by the absence of the usual suspects.