Bailout Watch 237: Say Bye-Bye to Bailout?
The AP reports that “Senate Majority Leader Harry Reid says the Democrats’ plan to tap the Wall Street rescue fund to save U.S. automakers doesn’t have the votes to pass. One day after Detroit’s Big Three sent survival plans to Capitol Hill in an urgent plea for $34 billion in government aid, Reid said there’s still not enough support in Congress for using some of the $700 billion bailout to help the teetering carmakers.” So it looks like the plan to tap Tarp has tapped-out. Plan B: modify the terms of the Department of Energy’s $25b retooling loans, as suggested by President Bush. Only Detroit is now asking for $34b, and the rest (bailouts for the automakers’ credit divisions). Plan C: new “emergency legislation” to top-up the Big 2.8 until Barack Obama administration can ride to the rescue (or not). Only CNNMoney says 61% of the voting public opposes that plan, and 70 percent it won’t do a damn bit of good for the U.S. economy (sorry Detroit). Plan D: pre-packaged bankruptcy, as suggested and outlined here on TTAC by Richard Tilton. And lo and behold, Bloomberg reports General Motors Corp. and Chrysler LLC executives are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multibillion-dollar government bailout.” Volte-face.
“Officials of the three automakers told members of Congress last month they had studied a pre-arranged bankruptcy, championed by Republican lawmakers such as Senator Bob Corker of Tennessee, before dismissing the idea as unworkable.” Let’s hope not. Meanwhile, anti-bailout opponents in Congress are busy positioning themselves as pro-C11 pre-pack.
“I don’t see the upside to the obligating of more taxpayer money for a private industry,” Georgia Rep. Tom Price, incoming chairman of the conservative Republican Study Committee, told FOXNews.com. “It’s painful, it’s not a fun process,” But some actually end up leaner, meaner, more profitable, more healthy in the back end of the process,” Texas Rep. Jeb Hensarling, sitting chairman of the Republican Study Committee, toldthe F&B folk. “I don’t buy into the fact that (bankruptcy is) simply not an option.”
“This is so serious to the country’s long-term ambitions as a major super power,” Democratic Rep. Paul Kanjorski of Pennsylvania said. with characteristic bombast. BUT he added, “We’re not obliged to write a blank check.”
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