Big Three Bailout: Stopgap Loan Could Come Today

December 8, 2008
Today's chapter in the Big Three Bailout saga could bring a stopgap loan to GM and Chrysler that would tide them over until President-Elect Barack Obama takes office next month.

The Detroit News reports that the White House pegs a deal to free $15 billion in loans to GM and Chrysler as "very likely." No formal proposal's been seen yet by the Bush administration, but the money is supposed to be drawn from the $25 billion loan package authorized earlier this year, to help Detroit's automakers retool to build greener cars and trucks.

Passage of the loans could come as early as Wednesday. Meanwhile, some Congressional leaders like Sen. Chris Dodd continue to hint that management at GM and Chrysler should change as a condition of any loans to come--a change that many insiders and Detroiters would see as a huge step backward on the road to profitability.

The loans will let GM and Chrysler float in limbo for another six weeks while the Obama team and the newly composed Congress take office in January. The alternative--favored by Republicans like Alabama's Richard Shelby (R-Ala.), would be to let the automakers go bankrupt--a decision that a new study says could cost up to $120 billion, or four times as much as the current bailout package being lobbied in the halls of the Capitol. Bankruptcies at GM and Chrysler could shut down all U.S. auto production for months and could eventually cost almost 2 million jobs and $70 billion in tax revenue.

If the loans are approved, it's increasingly likely they will come with considerable and powerful oversight. The Detroit Free Press says 9/11 compensation-fund organizer Kenneth Feinberg could end up becoming a new "car czar" to lead the government-funded reorganization of the Big Three automakers--a title which would neatly trump GM Vice Chairman Bob Lutz' honorary "car czar" title within the world's largest automaker.

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