Bailout Watch 222: Motown's $25 Bailout Bill DOA?
The Detroit News reports that Senator Harry Reid has thrown in the proverbial towel for the Detroit bailout bill– at least for this week. Thanks to less-than-stellar Congressional testimony by Ford, Chrysler and GM CEOs, their plan to carve-out and carve-up $25b from the fed’s existing $700b bailout fund seems to have, as the Brits put it, come a cropper. “Senate Majority Leader Harry Reid said that he wanted to figure out some way to help Detroit’s struggling Big Three but that efforts to do so had stalled.” That’s a Gulfstream’s gas tanks’ worth of not good for Motown’s mismanagers. Taken literally, it means Reid won’t be following President Bush’s suggestion and perverting the intent of the existing $25b Department of Energy loans– for a quick-fix capital injection. Still, the federal trough is never totally closed to those who spend ten million plus on lobbying. “A bipartisan group from auto industry states is working to cut a deal on a scaled-down aid package. If agreement can be reached, Reid said the Senate could still vote on it as part of a measure to extend jobless benefits.” As the hearings over the last two days established, even $25b isn’t enough to see the D2.8 through next year. Which means that anything less is… a death sentence. Will GM CEO Rick Wagoner sleep well tonight, knowing that it’s game over? “It’s completely due to the credit crisis,” Wagoner said at today’s Senate hearing. So, yes, Tempurpedic bliss for the bailout boys. How messed-up is THAT?
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As noted above, the corporate jet saga is pure symobolism over substance, the type of thing your average Washington politician salivates over. We need to realize something. Perhaps the last people in this country truly qualified to grill CEOs of giant corporations are congressmen. Unfortunately, that's how our government works, and there's nothing to be done about it. But, that doesn't mean we have to take seriously every boneheaded moronic question they lob out in front of nationally televised hearings. Their primary objective is pure self-promotion, not necessarily the prudent stewardship of federal dollars. This latest display proves that quite effectively.
Jerome and Ken, It's you who completely miss the point. This is not about 25B dollars which is chicken feed compared to the the trillion $ Wall Street bailout. This is all about politics, PR, trust. This is exactly the same claim that it doesn't matter how much Wagoner makes since his 15 million dollars doesn't make difference to the 1-2 billion a month cash burn. In fact this is one of the few things that matter because they show that these people have a complete disregard for reality. Which is what brought them to this position and which guarantees that any money forthcoming will be wasted. In a real world you don't pay 15 million for a failed CEO, you don't travel on private jet while begging for a bailout. It's not just bad PR, bad PR is paying 15 million while firing people before Christmas to increase you profit. Paying 15 million to someone who destroyed the once biggest company in the world and then go beg for a bailout shows you are living in a completely different reality than planet Earth. And BTW if all the execs got on one plane and the plane crashed I believe Detroit would be a lot closer to Federal bailout than it is now.
ra_pro: "And BTW if all the execs got on one plane and the plane crashed I believe Detroit would be a lot closer to Federal bailout than it is now." Hmmm.
@ra_pro: I agree. The Indicator is the thing.