U.S. to use bank bailout to aid automakers

International Herald Tribune ^ | December 12, 2008 | By David M. Herszenhorn and Micheline Maynard

[Ernest_at_the_Beach]

WASHINGTON: Following the collapse on Thursday evening of efforts to rescue U.S. automakers with congressional legislation, the Bush administration shifted positions on Friday and said that it would dip into the money set aside for the $700 billion financial bailout to keep General Motors and Chrysler from going bankrupt.

"Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms," Dana Perino, President George W. Bush's spokeswoman, said in a carefully nuanced statement released minutes before the financial markets opened in New York.

"However, given the current weakened state of the U.S. economy, we will consider other options if necessary - including use of the TARP program - to prevent a collapse of troubled automakers."

The Treasury Department promptly indicated that it would provide short-term relief to the automakers. "Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry," said a Treasury spokeswoman, Brookly McLaughlin.

TARP is the Troubled Assets Relief Program, the official name of the Treasury's financial rescue program, originally intended to assist banks.

[chris37]

President Bush seems ever so loyal to the members of his party who put their necks on the block to stop this insanity. What a stand-up guy.

[Dawn531]

So what’s the latest? Article I read last night by Kudlow said it was far from a done deal. I haven’t heard read anything else about it this AM.

[EGPWS]

Government to use personal hard earned labor of all to protect the politically lucrative few for political gain.

What a tangled web....

[a real Sheila]

why in the HELL was there even a senate vote if this was going to happen?

There will probably be NO oversight.
It will end up becoming the cluster as the first half of the financial bailout, with nobody having a clue where the money went. I bet the GM execs will get big bonuses and the UAW workers will all get raises as they continue to produce cars nobody wants to buy.
MEanwhile, we taxpayers get NOTHING for our money.
How about a bailout in the form of NICE tax break/incentive to anyone who buys a GM auto between now and April 15?

[EGPWS]

President Bush seems...

'Nuff said.

[drc43]

If the Car makers declare bankruptcy, what happens to the stock holders?

Someone please answer that one.

[irishjuggler]

In bankruptcy, the common stock becomes worthless.

[hedgetrimmer]

to aid automakers FOREIGN production facilities.

Carmageddon! Taxpayers may have to fund bail-out of car industry as U.S. meltdown threatens 1m British jobs

General Motors to Invest $1 Billion in Brazil Operations -- Money to Come from U.S. Rescue Program

[ZirconEncrustedTweezers]

What does he care? His term is almost up anyway.

And even if he didn’t do this, some sort of bailout would be going through after The One takes office. But then the Dems would have full ownership of the problem.

[Las Vegas Ron]

Can't wait to see what strings are attached

[drc43]

"In bankruptcy, the common stock becomes worthless."

So then, quite a few non union folks...(as in retirement funds) have a lot to lose then. I have not heard many on this board bring up this inconvenient fact.

I do NOT like the platter before us, but you all better be prepared for some real devastation if we allow those holdings to be wiped out.

[Las Vegas Ron]

In bankruptcy, the common stock becomes worthless.

I heard yesterday (on FOX I think) that GM was only worth 2 billion now. Stock would alredy seem to be worthless anyway

[drc43]

"Stock would alredy seem to be worthless anyway.. "

Careful on that one.. How many retirees and close to it are holding on, waiting for recovery.. before all this happened...

This could be a real disaster that should be carefully thought.

These are our fellow citzens that have invested, but were totally blindsided by our terrible energy policies that precipitated this mess...

[rigelkentaurus]

I thought the latest plan was to send members of the new Civilian Security Associates (let’s just use SA for short) door to door to collect the UAW handouts in cash?

[LiberConservative]

If I buy a stock and it tanks, who bails me out? “Inconvenient?” It ‘s called “capitalism”.

[uncbob]

YEP the $750 that was mandatory for the banks was found to be too late for the banks so instead of voiding it and eliminating any new debt it is burning a hole in the politicians packets and they have to spend it

[Ernest_at_the_Beach]

I am not sure what exactly is the latest....I know that the UAW is using the Bull Horn....saying the Senate Republicans are Bad people...but this non reported fact is very interesting:

FR Thread which I posted:

Senate Democrats Had Enough Republican Votes to Pass the Bailout

8 Democrats did not vote for the proposed Senate Bailout package....

[Michael Barnes]

These are our fellow citzens that have invested, but were totally blindsided by our terrible energy policies that precipitated this mess...

bwahaha...where is the /s???
Blindsided? The writing was on the wall as to our energy policies, its complete collapse is only a matter of time now.
As to investing, just how long did anyone think UAW run shops were going to survive? Their policies are not in line with what the market will accept.

This will be a real disaster; one that needs to happen to allow a correction to occur. Only thing a "bailout" will do is prolong the obvious; the big three are kaput in their current capacity.

[irishjuggler]

I heard yesterday (on FOX I think) that GM was only worth 2 billion now. Stock would alredy seem to be worthless anyway

Not quite. Where I come from, $2 billion is still quite a bit larger than zero. And another post indicates, the stock at this point still carries with it the possibility of a rebound. Bankruptcy will wipe that out.