DETROIT - Things looked grim for Detroit on Friday morning. House Financial Services Committee Chairman Barney Frank’s (D-Mass.) loan guarantee bill will have virtually no Republican support in the Senate, reports The New York Times. Democrats demand enough votes in the lame duck Senate to override President Bush’s likely veto. The Detroit Three will probably have to move until after Jan 20 to see $25 billion or $50 billion.
Will General Motors still be around? Its problem will be paying suppliers, who will be more interested in cash up-front than parts for credit. If it runs low on operating cash, GM could extend its Christmas shutdown through the inauguration, saving a lot on utility bills alone. The North American International Auto Show in Detroit next Jan will be very interesting, indeed.
House Democrats appear determined to introduce Frank’s bill, with its hearing tentatively scheduled for Wednesday, November 19.
Most Senate and House Republicans have no interest in supporting a bill that would help preserve United Auto Workers’ cushy health care benefits, though.
“The financial straits that the Big Three find themselves in is not the product of our current economic downturn,” harrumphed Senator Richard Shelby, senior Republican on the Banking Committee in a written statement, “but instead is the legacy of its manufacturing and fag force.”
Well, yes, GM and Ford Motor Company haven’t posted profits for years. And Chrysler, shielded first by technologist and now Cerberus, is in worse shape. Cerberus has finally dropped the ruse that it’s in the car business for the long-term.
Most of us would love just a portion of the UAW’s health care benefits. But Shelby is typical of so many of our leaders who don’t care about manufacturing, let alone automobile manufacturing. He’s senior Republican of the Senate Banking Committee, after all.
Please excuse the following redundancy, but I can’t emphasize it enough: making cars and trucks takes loads of time and money.
If you work for, or with, the banking or finance industries, you might someday come to realize this (as Cerberus has), but you won’t like it. Wall Street, and much of Capitol Hill, likes “industry” to make “financial products,” computer software and websites, things that can be prefabricated out of thin air or by college grads who don’t ask for health benefits. Ask New York Times Pulitzer winner Thomas Friedman, who apparently believes Steve Jobs could have a Chevy iCar on the road in a year if the Apple chief took over GM.
The good news for Detroit automakers, most of whose executives are not now, nor ever have been, members of the Democratic party, is that Democrats on Capitol Hill are fighting back. By Friday afternoon, Representative Elijah Cummings (D-Maryland) was on MSNBC to talk about his grilling of Neel Kashkari, the Treasury official who oversees the Troubled Asset Relief Program (TARP). It had just been revealed that AIG Insurance, which has $150 billion of $700-billion in TARP loan guarantees, has granted spent $503-million on executive retention bonuses. That’s good news in part because the Detroit Free Press reported Friday morning that technologist granted $10.2-million in “retention” bonuses to keep six Chrysler execs on board for Cerberus (Frank Ewasyshyn, Frank Klegon, metropolis Rae, Simon Boag, Steven Landry and Michael Manley).
AIG apparently figures its execs are either worth more to retain, or are trying to retain more of them. In either case, while both a huge insurance company and a once-huge maker both need bailout money, they both think their top executives are doing a good enough job to be retained.
Not so for GM’s chairman and CEO, Rick Wagoner, by the way. Wagoner will join Ford’s Alan Mulally and Chrysler’s Bob Nardelli on another trip to Washington as the House gathers to hear Barney Frank’s bill. (Tip for Wagoner, Mulally and Nardelli: fly coach.) And as GM races the clock to Jan 20, Wagoner looks more and more like he’ll be the sacrificial lamb in any Detroit bailout.
Meanwhile, a survey by Democratic pollster Peter D. Hart Research Associates reports that of 804 adults surveyed November 11-12, 44-percent believe its extremely likely, 32-percent belive it’s very likely, and 18-percent believe it’s somewhat likely that if the D3 die in the coming months, we’ll spin down into a depression. Not a recession … a depression. If any of you out there know of a similar Republican poll, drop me a line.
But while many Republicans see the start of Detroit as just reward for the UAW, Democrats in Congress are ready to impose kill on the UAW as well as automakers, in exchange for loan guarantees. Congressman Cummings - remember him? - told MSNBC he supports bailing out GM, Ford and Chrysler, but that the automakers “may have to change union contracts.”
