President Obama lays down terms for Auto Bailout

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The White House on Sunday pushed out the chairman of General Motors and instructed Chrysler to form a partnership with the Italian automaker Fiat within 30 days as conditions for receiving another much-needed round of government aid.

The decision to ask G.M.’s chairman and chief executive, Rick Wagoner, to resign caught Detroit and Washington by surprise, and it underscored the Obama administration’s determination to keep a tight rein on the companies it is bailing out — a level of government involvement in business perhaps not seen since the Great Depression.

Mr. Obama’s auto industry task force, in a report released Sunday night assessing the viability of both companies and detailing the administration’s new plans for them, concluded that Chrysler could not survive as a stand-alone company.

The report said the company would get no more help from the government unless it can finalize a proposed alliance with the Italian automaker Fiat by April 30. It must also reduce its debt and health-care obligations.

If a deal is reached between Chrysler and Fiat, the administration says it would consider another loan of $6 billion to Chrysler.

G.M., on the other hand, has made considerable progress in developing new energy-efficient cars and could survive if it can cut costs sharply, the task force reported. The administration is giving G.M. 60 days to present a cost-cutting plan and will provide taxpayer assistance to keep it afloat during that time.

The plan Mr. Obama announced today will also include government backing of warranties for G.M. and Chrysler cars and trucks, to give consumers enough confidence to buy them, even if one or both are forced into bankruptcy.

Most of the TV talking heads wasted my time. They didn’t have anyone commenting with experience in business, automobiles or consumers.

Rising the bow wave of electoral politics from the presidential election there are new faces, new voices – and not much of any added insight from American media.

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7 thoughts on “President Obama lays down terms for Auto Bailout

  1. moss says:

    I was especially pleased to hear him support the “cash for clunkers” bill. Similar laws have worked out well in Germany and, frankly – as much as I love old Ruff Boy, 15mpg doesn’t cut it, anymore – even for a 15 year old pickup truck.

    Outside of those functions making the truck a necessity, e.g. firewood, trash to the transfer station, I don’t drive anymore. I don’t go to town. I don’t consider entertainment or cultural events in town. I can’t afford the fuel cost – in the long term.

  2. Hal says:

    That whole thing about backing the warranties! Have mercy. Can you imagine the paper work to get your car serviced in that light.

    Looks like Wall Street isn’t liking it one bit.
    I loaded up the free real time widget for tracking gold that I use while doing other work ( and before the markets opened the graph showed a big sell off in gold but once Wall Street opened it the price shot up.

    In part it may have something to do with Russia calling for a gold backed currency. Now it’s falling back down to where it was but I don’t get it why.

    With all the Presidents talk about nationalizing and putting tax payers on the hook for thinks like auto warranties now I would think everyone would be running like crazy from the dollar.

  3. moss says:

    Please, please don’t waste too much time trying to figure out what the market does day-to-day, hour-by-hour. You’ll get an ulcer.

    Though you should realize most nations in the industrial world often have a stake in their “national” auto brands. Nationalizing is only a swear word in private Euro conservative clubs – and the collective consciousness of TV-educated Americans.

    • Hal says:

      LOL yeah. You’re right about the ulcer.

      I’m not trying to figure it out so much as I find it interesting to watch.

  4. god says:

    Guaranteeing warranty/service work wouldn’t/shouldn’t take additional paperwork. Yes, you should hang onto usual paperwork.

    Cripes, I had dealer service done a couple weeks ago and walked away with enough paper to hide the windshield from the sun. There’s already enough paper.

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