|The Big Three Need a Bailot of $25 Billion, no make that $34 Billion, no make that $75-$125 Billion (390235)|
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The Big Three Need a Bailot of $25 Billion, no make that $34 Billion, no make that $75-$125 Billion
Posted by Russ on Thu Dec 4 16:22:02 2008An independent economist testified before the Senate today to give an appraisal that is slightly different from what was provided by the Big 3.
Read about it in this article.
US auto bail-out gathers speed
By Daniel Dombey in Washington and Bernard Simon in Toronto
Published: December 4 2008 17:42 | Last updated: December 4 2008 18:59
Members of the US Congress on Thursday gave the Big Three US carmakersâ€™ request for billions of dollars in federal aid a far warmer welcome than just two weeks ago in an indication that a bail-out of Detroit may be gaining political momentum.
The response to presentations by the chief executives of General Motors, Ford Motor and Chrysler in a hearing on Capitol Hill came despite a warning that the cost of a bail-out could eventually total $125bn, far beyond the $34bn in loans and credit lines currently sought by the carmakers.
But the mounting cost of bail-outs of the financial sector and more detailed restructuring plans submitted by the Big Three themselves have increased calls for aid for Detroit. Both congressional Democrats and the White House have softened positions they struck just two weeks ago as to the size and source of a new loan package.
Thursdayâ€™s hearing, at the Senate banking committee, comes ahead of another day of testimony at the House of Representatives on Friday and a possible extraordinary session of Congress next week to vote on legislation.
â€śWho among us believes we should risk the consequences of the collapse of one or more domestic automobile manufacturers?â€ť asked Senator Chris Dodd, who chaired yesterdayâ€™s hearing, warning that such an outcome â€śplays Russian roulette with the entire economy of the USâ€ť.
He added that the carmakersâ€™ request was â€śmodestâ€ť compared with the series of bail-outs for Wall Street. â€śThere is no doubt that the automobile companies have done far more, far more, I would suggest, than the financial companies to show that they deserve taxpayer support.â€ť
Mr Dodd said that unless the Bush administration made changes to its operation of the $700bn troubled assets relief programme â€“ which he accused of being ad hoc and unaccountable â€“ he would not support the release of the second $350bn tranche of Tarp funds.
A CNN poll released on Thursday showed that 61 per cent of respondents opposed using taxpayer funds to help Detroit.
â€śWe canâ€™t let the industry fail, millions of workers lose their job,â€ť added Senator Charles Schumer, rejecting the notion of a pre-packaged bankruptcy in which the federal government would extend the automakers funds only after they filed for Chapter 11. â€śBankruptcy is not a viable option, because it will seal the death of the auto companies.â€ť
Speaking to the hearing, Mark Zandi, chief economist of Moodyâ€™s Economy.com, a subsidiary of the ratings agency, said the bail-out could cost between $75bn and $125bn because of an â€śextraordinarily weak vehicle sales outlook.