Bailout Watch 224: "Ford Respectfully Requests… $9b"

Ford has released its nonclassified report to the Senate Banking Committee today, as CEO Alan Mullaly escapes from Detroit in his Escape hybrid. The Detroit Free Press has posted the entire report in PDF format, and it’s 33 pages of good stuff. The big news: despite insisting that federal funds are a “backstop,” Ford is asking for more money than it did last time Mr. Mullaly went to Washington. Specifically, Ford offers three scenarios, ranging from a short-term recovery (14.5m total US market in 2010 = $5b in support), to normal (12.5m in 2010 = $9b) to short-term worsening (11m units in 2010 = $13b). Ford’s “recommended terms of the loan would be: (i) at government borrowing rates; (ii) a revolving credit line with a ten year duration; and (iii) with additional conditions consistent with the TARP legislation.” When was the last time you “proposed” your own loan terms?

The plan calls for Ford’s senior executives to forgo any salary increases or bonuses in 2009, and beyond “as business conditions warrant” (nothing official to back up Mullaly’s claim to the WSJ that he’d take a $1/year salary to get the loans). Though Ford accepts that loans may be “callable,” it firmly rejects the possibility of any form of ownership change or even grant full seniority to government loans, arguing “A condition of senior status for any government loan could cause lenders or holders of our debt to allege a debt default, which could result in an acceleration of indebtedness and lead to the very result the legislation was designed to prevent, namely, a liquidity crisis.”

On the product front, Mullaly claims half of Ford, Lincoln and Mercury light duty vehicles will meet “Advanced Technology” standards, increasing to 75 percent in 2011 and more than 90 percent by 2014. Unfortunately, this includes “bio-fuels such as ethanol as an important long term solution to our energy needs.” Also, “Should pension investment returns not recover, or continue to deteriorate, government loans could be used to ensure the overall strong funding status of our pension plans.”