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November 13th, 2008

Bailout: What Could it Cost, When Will They End?



Phil LeBeau, author of CNBC’s blog Behind the Wheel, provides his breakdown of what an automotive bailout could cost the Big Three:

Equity Stake in the auto companies?
Absolutely. Makes it easier to sell to angry constituents if Congress can say the U.S. will profit   from a rebound in the auto stocks.

Fuel efficiency benchmarks?
Yes. The devil will be in the details, but Congress wants concrete benchmarks the Big 3 will have  to meet in terms of fuel efficiency.

Car Czar?
Maybe. Someone who will hold the Big 3 accountable to making the reforms that will be mandated. This position only works if the person appointed truly understands the auto industry and has the authority to come down on Detroit in a year or two if the Big 3 fall short of their commitment.

Executives Fired?
I doubt that will happen, nor do I think it should. Oh I know some of you will e-mail and say, “Hey, the Treasury department should boot these guys and bring in others to run these companies.”

Stipulations and restrictions are all very well and good, but where do the bailouts end? The government is entering into a very gray area. Federal funds have already been used to prop up American Express, and now possibly three more private companies in the Big Three:

“Where do you stop?” says Bill Isaac, former chairman of the Federal Deposit Insurance Corp and now managing director at the LECG global consulting firm in Vienna, Va. “Circuit City’s going down. Do we help them? What do you do if Starbucks gets in trouble? Do you help them?”

Readers: What should the government do — bailout Detroit or allow the Big Three to fail? Do private companies deserve bailouts?

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3 Responses to “Bailout: What Could it Cost, When Will They End?”

  1. b sabel Says: December 11th, 2008 at 1:02 pm

    Could phil lebeau ask kudlow how it feels to be an asshole?
    thanks,b sabel

  2. Howard Needle Says: February 17th, 2010 at 12:51 pm

    Phil Lebeau recently (2/17/10) 11:30am commented that Ford is now the “toast of Detroit” when comparing Ford to Toyota and the difficulty that Toyota will have in repairing their image. It is hard to believe that anyone could refer to Ford as the “toast of Detroit” given the fact that they still remain in arreages with respect to dividends owed on their convertible and straight preferreds. These guys are “deadbeats” as far as I’m concerned. Ford needs to meet their obligations and stop hiding behind the facade that they are now the automobile company to emulate. They need to pay their bills. They need to meet their obligations. Becoming the “toast of the town” is easy as long as you remain delinquint on your financial and ethical obligations.

  3. Tim Manni Says: February 17th, 2010 at 2:26 pm

    Hey Howard,

    I can understand where Phil’s coming from. Ford didn’t take bailout money like their two compadres did, they adjusted their lineup to offer a more balanced group of vehicles (large, small, hybrid, etc.) and their sales are doing fairly well.

    They may still be in debt, but compared to Chrysler and GM, they’re the toast of Detroit.

    Thanks for commenting,

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