Bailout Watch 432: McCain and Shelby Call for GM C11

Robert Farago
by Robert Farago
bailout watch 432 mccain and shelby call for gm c11

Students (student?) of Sunday TV magazine shows will know that the Republican Party is beginning to realize the political advantages of throwing Detroit to the lions—I mean, upholding their responsibilities as guardians of the public trust (and purse). “The best thing that could probably happen to General Motors, in my view, is they go into Chapter 11,” Senator John McCain said on Fox News Sunday. Which would help GM reboot (not that John would ever say anything so hip), reorganize (not that John knows what that would entail) and renegotiate its labor contracts (ah-ha!) and emerge “stronger, better, leaner.”

Bloomberg reports that Senator Richard Shelby, the top ranking Republican on the Banking Committee, told ABC’s “This Week” program that, “The automobile business—those companies, Chrysler, Ford and General Motors—they’re in deep shit.” Just kidding; he said trouble. “I’ve suggested they go into Chapter 11. That’s where they belong. And they could reorganize.” Yes, but did he raise his hand first?

Meanwhile, Republican House Minority Leader, John Boehner, continues to promote the same old weasel words.

Boehner said on Face the Nation that the feds shouldn’t give GM any more money “until General Motors shows that they can be a viable company for the long term. Anything short of that is just throwing good money after bad.” May I suggest mime? Now THAT I’d watch.

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  • Fallout11 Fallout11 on Mar 09, 2009

    It's already too late for C11, GM and Chrysler would already be closed and liquidated if it weren't for billions in taxpayer dollars they've already received. Without $100+ billion more in DIP, it's C7 time for both, no one in the market will touch either (seen GM's stock value lately?) with a cattleprod.

  • Droid800 Droid800 on Mar 09, 2009

    @Fallout It isn't too late for Ch. 11. If it gets to the point where they're running solely on government money (which they have not reached yet, but are getting very close to), THEN they'll have a problem. DIP isn't a problem either; the government has been working for weeks to line up the financing, and will finance a large chunk of it itself.

  • Andrew van der Stock Andrew van der Stock on Mar 09, 2009

    @ jurisb Protectionism has already hit GM and Ford. They have desirable small cars in EU that they've already sunk all the R&D and built. Last year, when the large car / SUV market tanked due to $4 gas, and GM and Ford sold every sub-compact and compact they could get their hands on. But the protectionism they argued so strongly for in past years to protect their dinosaurs killed them - they didn't have the right product in the right region. They HAD hundreds of thousands of unsold compact cars they could have easily sold into the USA if they hadn't been so incredibly stupid in the past. If the US had not installed protectionist "safety" rules unique to themselves, they could have imported these cars and sold them in the US with no changes. As it is, they have to "invest" (read: pay twice) to meet US safety regulations, some of which make no sense, like red light indicators when everyone else has ambers, and fuel tank location (which is irrelevant when it comes to fuel injected cars - the fuel pump creates a vacuum, removing fuel vapors, which caused the Pinto booms back in the 70's. This is one of those times when folks fundamentally shifted jobs, like the agrarian revolution and industrial revolution. This is the post industrial revolution. Just as in the 1800's when most of us worked tired and miserable lives on the farm, nowadays a single farmer can work hundreds of acres and produce a thousand fold more produce than those bad old days. Protecting our farm industries - other than appropriate bio controls to protect against pests - doesn't make sense either. It didn't protect against the job losses from farms as tractors and harvesters replaced millions of workers. Protectionism has hurt GM, Chrysler and Ford. They had import tariffs and still have other significant trade barriers to "protect" against imports. What did they do with that benefit? They chose to design and produce crappy cars instead of the world's best cars that once were rightfully lusted after the world over. Protectionism is the lazy option and as soon as it stops, folks choose to buy high quality, highly reliable, good value alternatives - and that doesn't mean cheap, otherwise we'd all be driving small death mobiles. Protectionism does not work. You think it might, but it really does not work. Andrew

  • Beken Beken on Mar 09, 2009

    What I don't get is, if the government really wanted to help the D2.x, why didn't they just renew the entire fleet of government vehicles and buy cars and trucks? (What? You mean the American government won't buy American vehicles?) Car companies are in the business to build and sell cars. Why aren't they selling cars? Why isn't GM/Chrysler/Ford building vehicles so good that it would make Americans proud? r-i-g-h-t...fleet sales. Why are they building crappy fleet cars? What's wrong with fleet cars? Unfortunately, Government procurement contracts make the money disappear in the bureaucracy somewhere. GM's viable plan should have been they will sell a million vehicles to the government. The vehicles will be such great quality that the American people would follow suit and do likewise. Instead, we have this giant multinational begging for Billions of dollars of public money knowing full well, those millions of jobs they are saving are going to be lost no matter what as well as the money they get from the government. Why won't the government just buy $40B worth of cars? This was funny for awhile, but it's getting tiresome. PS. For those that saw SNL last weekend, I would like to nominate my suggestion for the prize ;)