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