Automaker Bailout

So, the news has been back and forth lately around the CEOs at the big 3 automakers saying at Congressional hearings they are "too big to fail," somewhat like CitiGroup did, and along with union representatives are requesting a bailout. The first round, they arrived in Washington in their private jets and asked for $25 million all told. They left empty-handed. This time, they drove there in their hybrid cars and requested $34 billion. It seems from reading about it they had a mixed and lukewarm reception, but an agreement has been reached between the White House and Congressional Democrats for $15 billion in loans.

I wrote my representative Nancy Pelosi, urging her to not use taxpayer money to support unprofitable corporations; rather, what is best for America would be to let the big 3 go under, so their production capacities could be sold to new firms that conduct their business better. I mean, at least the financial industry didn't off-shore Wall Street jobs... I don't think.

Actually, I see a plan starting to unfold: passing another bailout would be politically inexpedient at this point; so, Congress agrees to pass the unspent $350B of TARP bailout money, if the Bush adminstration agrees to give some of it to automakers.

UPDATE [12/11/08]: Though the $14B bailout proposal of the automaker passed in the House, today it was voted against in the Senate. Plan B mentioned in the above paragraph is still in play. [12/19/08] The Bush administration, citing concerns of a disorderly failure of automakers, will lend $13.4B to GM and Chrysler, coming from the first $350B of TARP bailout money. The second $350B still remains unapproved by Congress. Apparently this finishes up the first $350B of TARP funds. [12/29/08] For what it's worth, the Canadian government throws in another $4B to rescue the automakers, and the Treasury allows GMAC, which financed mortgage and auto loans, to be regarded as a bank, and adds another $6B to GMs bailout.