Bailout Watch 239: Moody's Chief Economist "$125b, But Do It Anyway"

bailout watch 239 moodys chief economist 125b but do it anyway

Sadly C-Span‘s coverage of today’s Senate Banking Committee didn’t kick off with a red carpet arrival of America’s automotive future. Similarly, a longish hearing with only the GAO General Comptroller didn’t do much to raise the pulse. It seems that TARP funds are still rhetorically on the table, and some form of oversight board will go along with any bailout. In fact, the seventies were back in a big way, as the 1979 Chrysler bailout is referenced as a model on numerous occasions. As if Chrysler’s CEO weren’t sitting there asking for more money. MarketWatch reports that Comptroller Dodaro said the Federal Reserve also has authority under current law to lend money to the Big Three, if the Fed board of governors determined that the need is urgent and that the loans would be repaid. However, the Fed has determined that it cannot lend to the companies because the loans cannot be collateralized as required.

Then we had prepared statements which ranged from surly and defensive (Gettelfinger), to contrite and reborn ( Mulally), and from wildly optimistic ( Nardelli) to wildly pessimistic (JCI Boss Keith Wandell). But the only shocker so far has come from Moody’s Chief Economist Mark Zandi, who stated that the Detroit auto firms would need $75 to $125b to avoid bankruptcy over next several years. He argues that reorganization is absoloutly necessary, but that it would be “better” if it didn’t happen in bankruptcy court, and thus he is in favor of the bridge loans. What, does this guy not pay taxes? Anyway, this issue is dominating the questioning as the hearings go on, so we’ll keep you posted as more answers come in.

Update: The Freep has excerpts from the witnesses’ statements.

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  • RetardedSparks RetardedSparks on Dec 04, 2008

    Nardelli needs some serious PR. As Corker pointed out, there is a snowball's chance that Congress will give money to a private company that has billions in cash under the mattress but wont spend it (sorry, unless they are a bank). I predict GM gets $4B to hold them over until March, Ford "passes" in order to avoid forced restructuring, and Chrysler gets left to twist in the wind. Who says they all have to get the same?

  • Ronnie Schreiber Ronnie Schreiber on Dec 04, 2008

    Zandi's figures include the $25 billion already allocated. Add $34 billion they asked for today and you get $59 billion. He said they'd need a total of $75 to $125 billion total, meaning if they get the $34 billion they're asking for now, they could potentially need an additional $16 - $66 billion. While that's a lot of money, it's not $125 billion.

  • Hasnain Needs more Telluride.Next time the series will return to Kia’s full-size offerings, as the company attempted to recover from the general flop which was the derivative Opirus. See you then. a pile of sheeite
  • Conundrum All that verbiage for a brake fluid reservoir cap that sorta kinda fails over time? That's all it is, right? The vent hole gets plugged up or something. Quelle horreur, it's the end of civilization as we know it. What happens when Micky D's doesn't put enough extra ketchup in your order at the take-out window? You must have an existential histrionic fit!Cue the cheapskate commenter: "Jeez. I drove my 1987 Corolla 734,562 miles, the last 83K with the emergency spare on the left rear, and it didn't even use up all the tread! Plus, I never had brake failure and it never used a drop of oil even though I used Walmart $1.88 stuff in a plastic gallon jug. I guess Toyota could teach those Ferrari guys sump'n about how to build cars!"
  • Skippity Noticeable as an Paseo. Maybe I'll see it differently live.
  • Tagbert I had this JX, though mine was a 5-speed in dark green. Got it when I lived in the mountains in Colorado. That was a fun little beast. Not super fast, but it could go just about anywhere. Put it into the low speed on the transfer case and that thing would just creep forward. The interior was not fancy but it held up well to lots of outdoor activities. I could hold lots of gear. Later when I moved away, it still proved useful. I was an unofficial “roadie” for my boyfriend and his band. Could get all their gear into it. The in-town gas mileage was around 25 mph which is pretty good. On the downside, the highway mileage was maybe 26 mph 😊.
  • Skippity I had a 308 in the 80's. Said Matchbox on the bottom.