The media told us we’d have a deal sometime Monday. Now it’s Tuesday a.m., and they are still inching toward a financial rescue package. One General Motors exec reportedly is already talking about the need for more than the $15 billion under consideration. Meanwhile GM continues to burn through cash at a reported $2 billion a month, and the fire has spread abroad as Fiat seems to be seeking a suitor. The CarGurus Blog wrote on this unhappy trend last week.
Senator Bob Corker (R-Tenn.), a thoughtful man, was quoted as saying the plan “appears to be weak and lacking the benchmarks we believe are necessary to put these companies on a viable, sustainable path.”
Most in the Congress want a viable long-term reorganization plan for the companies, with strict accountability and “haircuts” for all the stakeholders (unions, management, suppliers, dealers, investors), and you can be sure these are going to come, one way or another.
The unions have already taken a big hit. As UAW Chief Ron Gettlefinger put it, “To my knowledge, no one has proposed cutting the compensation of everyday active or retired bankers, bond traders, and office or building personnel who work at AIG, Bear Stearns or the numerous banks that have received billions in federal aid.”
Does he have a point? What’s fair is fair, right? Well, of course, it all depends on where you sit.
If you’re Barney Frank (D-Mass.), your draft bill includes taxpayer protections, prohibitions on bonuses, golden parachutes, private jets and payment of stockholder dividends. If you’re Czar-in-Chief in the Oval Office, you’ll want to appoint a new Car Czar to act as principal enforcer so there won’t be any indecision or temporizing.
If you’re sitting at home waiting for the next shoe to drop in the unfolding economic chaos, sit tight and stay tuned. This bailout bill won’t make anybody happy.
Is the present bailout bill the right thing to do for the auto industry now?