The ah-ha moment of the week, President Bush announced Friday that the federal government will provide up to $17.4 billion in loans to GM and Chrysler, which warned that, without aid, they might go out of business by the end of the month. So the band-aid to aid two of the big three stops what exactly? My question: why prolong the inevitable?
The biggest offender being Chrysler which is private equity backed.
Criminal. When will the next line up of private based companies leave the private jets at home and come looking for a band-aid.
"In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action," Bush said. Spoken like someone in the know. Not.
Does this mean GM and Chrysler have avoided bankruptcy? Hardly. The administration's plan essentially allows the automakers to tread water until March 31 while they construct drastic restructuring plans for long-term viability. If they cannot do this, "the loans will provide time for companies to make the legal and financial preparations necessary for an orderly Chapter 11 process," Bush said. No accountability of course.. No czar or czarina.
Under the terms of the deal penned Friday GM and Chrysler will immediately receive $4 billion each from the Treasury Department's Troubled Asset Relief Program, the administration's war chest to alleviate the so called "credit crunch" GM--far larger than Chrysler--is eligible for an additional $5.4 billion on Jan. 16. With Congressional approval in February, the companies can tap into an additional $4 billion in TARP money. The good news? T-Minus 30 days until the new administration takes the helm. Let's keep our fingers crossed someone has the good sense to rip off the band-aid and end subsidising the big dinosaurs of the motorcity.