Bailout Watch 434: Memo to PTFOA: Original Bailout Terms

Robert Farago
by Robert Farago

The Original Bailout Terms:

Viability Requirement: The firms must use these funds to become financially viable. Taxpayers will not be asked to provide financing for firms that do not become viable. If the firms have not attained viability by March 31, 2009, the loan will be called and all funds returned to the Treasury.

Definition of Viability: A firm will only be deemed viable if it has a positive net present value, taking into account all current and future costs, and can fully repay the government loan.

Binding Terms and Conditions: The binding terms and conditions established by the Treasury will mirror those that were voted favorably by a majority of both Houses of Congress, including:

-Firms must provide warrants for non-voting stock

-Firms must accept limits on executive compensation and eliminate perks such as corporate jets

-Debt owed to the government would be senior to other debts, to the extent permitted by law

-Firms must allow the government to examine their books and records

-Firms must report and the government has the power to block any large transactions (> $100 M)

-Firms must comply with applicable Federal fuel efficiency and emissions requirements

-Firms must not issue new dividends while they owe government debt

Targets: The terms and conditions established by Treasury will include additional targets that were the subject of Congressional negotiations but did not come to a vote, including:

-Reduce debts by 2/3 via a debt for equity exchange


-Make one-half of VEBA payments in the form of stock


-Eliminate the jobs bank


-Work rules that are competitive with transplant auto manufacturers by 12/31/09


-Wages that are competitive with those of transplant auto manufacturers by 12/31/09

These terms and conditions would be non-binding in the sense that negotiations can deviate from the quantitative targets above, providing that the firm reports the reasons for these deviations and makes the business case to achieve long-term viability in spite of the deviations.

In addition, the firm will be required to conclude new agreements with its other major stakeholders, including dealers and suppliers, by March 31, 2009.

[thanks to windswords for the link]

Robert Farago
Robert Farago

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  • Robert Farago Robert Farago on Mar 09, 2009

    windswords Text amended. No clue.

  • Windswords Windswords on Mar 09, 2009

    From http://babylon5.wikia.com/wiki/Wind_Swords The Wind Swords are a Minbari warrior clan. They were amongst the most radical in Minbari society. In ancient times, the Wind Swords were a mounted force probably with an emphasis on sword fighting. The Wind Swords are the most militant of all the warrior clans and jingoistic to the point that they will do anything to defend their world, even bypassing the circles of authority. Mentioned in the season 1 episode "Deathwalker".

  • TheMrFreeze That new Ferrari looks nice but other than that, nothing.And VW having to put an air-cooled Beetle in its display to try and make the ID.Buzz look cool makes this classic VW owner sad 😢
  • Wolfwagen Is it me or have auto shows just turned to meh? To me, there isn't much excitement anymore. it's like we have hit a second malaise era. Every new vehicle is some cookie-cutter CUV. No cutting-edge designs. No talk of any great powertrains, or technological achievements. It's sort of expected with the push to EVs but there is no news on that front either. No new battery tech, no new charging tech. Nothing.
  • CanadaCraig You can just imagine how quickly the tires are going to wear out on a 5,800 lbs AWD 2024 Dodge Charger.
  • Luke42 I tried FSD for a month in December 2022 on my Model Y and wasn’t impressed.The building-blocks were amazing but sum of the all of those amazing parts was about as useful as Honda Sensing in terms of reducing the driver’s workload.I have a list of fixes I need to see in Autopilot before I blow another $200 renting FSD. But I will try it for free for a month.I would love it if FSD v12 lived up to the hype and my mind were changed. But I have no reason to believe I might be wrong at this point, based on the reviews I’ve read so far. [shrug]. I’m sure I’ll have more to say about it once I get to test it.
  • FormerFF We bought three new and one used car last year, so we won't be visiting any showrooms this year unless a meteor hits one of them. Sorry to hear that Mini has terminated the manual transmission, a Mini could be a fun car to drive with a stick.It appears that 2025 is going to see a significant decrease in the number of models that can be had with a stick. The used car we bought is a Mk 7 GTI with a six speed manual, and my younger daughter and I are enjoying it quite a lot. We'll be hanging on to it for many years.
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