AFSCME 3357-HOF'S BLOG

Breaking New: White House OK's $17 Billion in Loans to GM & Chrysler

This morning the White House announced that it was directing the Treasury Department to release up to $13.4 billion in loans to GM and Chrysler in December in January, with the remainder of a $17 billion total presumably being available between January and March 31, 2009. By March 31, the automakers are expected to have long-term plans in place to be competitive with other automakers including the transplant factories in the US.

The restrictions on the loans are said to be similar to those roughed out in the House of Representatives bill last week. The government will be getting nonvoting stock warrants, and there will be restrictions on management salaries and bonuses. The automakers are expected to get concessions from labor, suppliers and bondholders.

This announcement follows the news yesterday that Chrysler was shutting all its plants for a month, and GM said it was putting on hold its crucial engine plant for the Volt electric car and Chevrolet Cruze compact. Yesterday, the White House made what I believe was an unnecessary and irresponsible announcement that one option they were considering was for an "orderly bankruptcy." The image that that announcement conveyed was that, after more than a month in crisis mode, President Bush didn't even know what type of plan he was going to implement, much less actually having the plan ready to go. It's like when your kid has a month to work on the project, and the night before it's due, he says, "It's going great, I've almost picked a topic." (Yes, it's happened to me too.)

Finally, just because the loans have been approved, I need to remind you that loan programs imagined by the Bush administration haven't lived up to their expectations. Take, for example the Hope for Homeowners mortgage loan project: billions of loans were authorized, but hardly anybody can qualify for them, and the terms are so lousy that hardly anyone even bothers to apply.