As if $25 Billion Wasn’t Enoughby Tim Manni
It’s easy to become cynical when the American automakers returned to Washington with an even bigger hat in hand, explaining it would now cost taxpayers $34 billion to save their companies — instead of the $25 billion discussed some two weeks ago. At this juncture we all understand what’s at stake if the three go under, but whether or not lawmakers and auto execs can agree on how to best save the companies and the American auto industry — and, oh yeah, we taxpayers — is another can of worms altogether.
After the Big Three (I’m curious to how much longer we will be calling them the “Big” Three) submitted their plans for “viability,” they revealed that General Motors is now seeking $18 billion, and Chrysler $7 billion, while Ford seeks a $9 billion line of credit. Chrysler says they need the $7 billion before December 31, and GM says they’ll need at least $4 billion immediately to cover costs. Ford seems to be in the best shape, reiterating in yesterday’s press release that they hope “to complete its transformation without accessing the loan should Congress agree to make the funds available.” Ford says they plan to become profitable or at least break-even by 2011.
Much to the dismay of Detroit, lawmakers have and will continue to meet this week with financial and bankruptcy experts to discuss the possible filing and restructuring of the three companies if they were to file for prearranged Chapter 11 Bankruptcy:
Both companies have said they don’t see bankruptcy as a viable option for any auto maker. They believe customers would stop buying cars and the company would be forced to liquidate.
But bankers and other financial experts are telling lawmakers that bankruptcy is the best option for creating smaller but viable U.S. car companies.
GM President Frederick Henderson has repeatedly expressed that bankruptcy is not feasible for the automaker — government aid is their only option, and there is no plan B, said Henderson.