Big Three Plead For $34 Billion From Congress

[ALien]

The CEOs of GM, Ford and Chrysler are back on Capitol Hill asking for loans and trying to undo damage they did during the previous auto bailout hearings.

NEW YORK (CNNMoney.com) -- The CEOs of the leading automakers were back before Congress Thursday, arguing for a larger bailout than they asked for just two weeks ago, and hoping to undo the damage they did to their case at the earlier hearings.

The executives of General Motors, Ford Motor and Chrysler LLC, generally faced less hostility from members of the Senate Banking Committee than they did at their last hearing two weeks ago.

But they still face an uphill battle for approval of any bailout, even though it is now more urgent for the automakers to get help.

The three automakers are now asking for up to $34 billion in federal loans, up from their earlier request for $25 billion in assistance. Two of them, GM (GM, Fortune 500) and Chrysler LLC, are warning they could run out of the money they need to operate before the end of the year without immediate help.

This time GM CEO Rick Wagoner, Ford (F, Fortune 500) CEO Alan Mulally and Chrysler CEO Robert Nardelli drove fuel-efficient hybrids to Washington, rather than flying in on corporate jets as they did two weeks ago.

Ford and GM have since announced they would sell their jets. And all three CEOs have agreed to cut their pay to $1 a year if they get the federal help they are seeking.

After presenting plans to Congress Tuesday that detailed how they would use loans to return to profitability, each company warned of tremendous damage to the economy if they are forced to file for bankruptcy due to lack of help.

In prepared testimony Thursday, Mulally quoted an estimate from Goldman Sachs that said the impact to the economy from failures could be up to $1 trillion.

Skepticism persists
Several members of the committee, particularly Republicans, challenged the assertions of the auto executives, however.

"I've read the plans and re-read the plans," said Sen. Bob Corker, R-Tenn. "I still believe there are many things that will be difficult to work out without chapter 11 [bankruptcy]."

Sen. Mike Crapo, R-Idaho, suggested that if federal loans are approved, a federal oversight board should be given the same kind of powers as a bankruptcy judge to impose changes in contracts and debt holders. None of the automakers said they would be opposed to this.

But getting approval for the loans may still be a tough sell. Even the Democratic leaders of the House and Senate who are in favor of help for the automakers have refused to commit to calling the outgoing members of Congress back next week to vote on an auto bailout.

Congressional leaders are concerned that public opinion has turned strongly against help for the automakers.

Protesters briefly disrupted the hearing Thursday, chanting "the bailout is a sell-out!" and urging Congress to use money to help the poor and food banks, rather than the auto companies.

A CNN/Opinion Research Corp. poll of nearly 1,100 Americans conducted earlier this week found 61% oppose a bailout, while only 36% support it. Even in the Midwest, home to most of the automakers' remaining plants, 53% of those polled opposed federal help.

That was a stunning reversal of polls taken before the CEOs last trip to Capitol Hill. A poll Nov. 11 and 12 conducted by Peter D. Hart Research Associates found 55% supported federal assistance for automakers at that time, and only 30% who believed they should not get federal help.

Corker called GM's plan "a nice first step" but he said that the company's debt levels are unsustainable at any level of sales. He also argued Chrysler is just trying to get the loan to stay in business long enough to be bought by another automaker.

"There is no sane person who thinks that all three companies can survive," Corker said.

Nardelli challenged that assertion, saying Chrysler would be able to stay independent if it gets the loan. He said the company's discussion in its turnaround plan of benefiting from further consolidation could include alliances instead of an outright merger.

GM and Chrysler were in merger talks earlier this year but GM said last month that it ended discussions with Chrysler because of the need to deal with its own cash crisis. But both Nardelli and Wagoner said Thursday they wouldn't rule out a merger in the future, even though they were not looking to do such a deal at this time.

Learning from their mistakes
In his prepared remarks, GM's Wagoner acknowledged the criticism of him and his fellow Big Three executives.

"It's fair to say that last month's hearings were difficult for us, but we learned a lot," he said. He said the companies revised their plans since then and accelerated their cost-cutting efforts.

"We're here today because we made mistakes, which we're learning from; because forces beyond our control have pushed us to the brink," Wagoner said. "Most importantly we're here because saving General Motors, and all this company represents, is a job worth doing."

United Auto Workers union President Ron Gettelfinger joined the CEOs in asking for help. He pointed to concessions that the union agreed to in the 2007 labor contract as well his promise made Wednesday that the UAW would work to give the automakers additional concessions. But he said the burden of saving the automakers shouldn't fall on the union and its members alone.

"If the federal government can provide a blank check to Wall Street, it should be able to provide a temporary bridge loan to General Motors, Ford and Chrysler," he said.

Nardelli stressed that one reason it's important to help the Big Three is because the companies are making great strides in hybrid and electric vehicle technology.

He argued that keeping the U.S. automakers afloat "would insure that we don't trade our dependence on foreign oil to a dependence on foreign technology."

But Sen. Richard Shelby, R-Ala., the ranking Republican on the committee, repeated his earlier opposition to helping the Detroit automakers.

He said the increase in the money being requested by the Big Three is a sign that the automakers can't give good assurances that federal loans would be enough to solve the problems facing the industry.

"If you made this presentation to get a bank loan, I suspect any sensible banker would systematically reject your request," said Shelby.

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[okirun]

Originally Posted by ALien

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I feel for those who are losing their jobs, they should be the ones paid most, not the three stooges.

[Truthed]

Originally Posted by okirun

I feel for those who are losing their jobs, they should be the ones paid most, not the three stooges.

Well they did agree to this:

And all three CEOs have agreed to cut their pay to $1 a year if they get the federal help they are seeking.

which is a good start...

[okirun]

Originally Posted by Truthed

Well they did agree to this:


which is a good start...

LOL, Do you mean a 1 million a year?

[Truthed]

Originally Posted by okirun

LOL, Do you mean a 1 million a year?

No, really $1... but $1 a year is better for them then having to shut down! Especially since it will last for 1 year max

[kidflash2008]

I think it is time for the Big Three to file for Chapter 11 bankruptcy (reorganization). It does not make sense for the taxpayers to give them $34 billion to burn through and then have them ask for more. It is time for them to sell/shut down brands that compete with each other and work on producing more efficient cars instead of more SUVs. I like how they bragged they drove the second time they visited.
I do feel for the workers who average $28 an hour, not the reported $70 or more that is always reported in the media. Non union places get $25 an hour. The next person who complains about the wages of auto workers should have to work a week at the job.