AFSCME 3357-HOF'S BLOG

Headline from 20 Hours ago: Chrysler Hires Bankruptcy Counsel
Headline from Now: Interim Deal to Supply $15 Billion in Bailout Money

Yesterday afternoon it was reported (leaked) that Chrysler hired the lawfirm of Jones Day to give it bankruptcy advice. It may be debatable whether this step was primarily intended as a ploy or a serious bankrutpcy planning. I think it is (and should be) a lot of both. It makes no sense for Chrysler or General Motors to hide bankruptcy plans when they have both admitted to the public that they can't last much past the end of the year without borrowing new money. If anything it will help them negotiate cramdowns with their creditors that would be necessary to avoid bankruptcy.

This morning - the big news is that there is a tentative deal between Congress and the White House to supply $15 Billion in interim aid to the auto industry. The Republicans apparently won the battle regarding the source of the money. The money will come from the $25 billion previously authorized for encouraging energy efficiency. There is some sort of vague promise to replace the money within a matter of weeks. The amount of the loans is likely to be just enough for Chrysler and GM to limp into March, by which time the Obama administration will (hopefully) have its feet on the deck firmly enough to take the wheel and set a planned course.