45 replies to this topic

[Mr. Roboto]

In surprising findings to be outlined at the White House on Monday, President Obama has concluded that neither GM nor Chrysler as they now exist deserve more bailouts. But the White House is sparing them for a month or two, and is promising American consumers that the government will stand behind warranties if the automakers fail. Most remarkably, the administration demanded that GM CEO Rick Wagoner resign so the company could remake itself “with a clean sheet of paper.” And he did, effective immediately. The administration also said GM has been given a “goal of replacing a majority of the board over the coming months.” The administration found that both carmakers had failed to prove their “viability” as required under the terms of the massive government loans they’ve already received, and determined that neither should receive another bailout. “We have unfortunately concluded that neither plan submitted by either company represents viability, and therefore does not warrant the substantial additional investments that they requested,” a senior administration official told reporters on a conference call Sunday night. Obama is to deliver his “remarks about the American automotive industry” at 11 a.m. ET. Under the hard-nosed “Obama Administration New Path to Viability for GM & Chrysler,” GM is getting 60 days of “working capital” – money to pay bills during the restructuring. The administration did not specify an amount. Chrysler is getting just 30 days to reach a long-discussed deal with Fiat, the Italian carmaker. The government would lend the new venture as much as $6 billion. “Chrysler is a more difficult situation,” the official said. “Chrysler is unfortunately not viable as a stand-alone company. … If [Chrysler and Fiat] cannot come to a satisfactory agreement … and if no other viable partnership emerges for Chrysler, we will not be able to justify investing additional American tax dollars into Chrysler.” The administration said both companies may need to restructure using the protection of courts, under a form of bankruptcy. The White House held a Sunday night conference call with members of Congress from auto-producing states, and the lawmakers were far from satisfied. "Tough love hurts," said a source familiar with the discussions. "The members received the briefing with a sense of anxiety.” The source said the timeline and funds to be announced Monday are "not good enough." The shove to Wagoner, a 30-year GM veteran, came from the Treasury-led Presidential Task Force on the Auto Industry, which Obama named in February in lieu of a “car czar.” It is the most vivid example so far of the extraordinary new role that the government, as controller of the bailout purse strings, is playing in American business. A senior administration official said there was no “quid pro quo” for Wagoner’s departure: “The task force asked, and he agreed to leave GM.” The warranty program, a surprise offering, is designed to encourage consumers to buy cars without having to worry about whether or not the manufacturer will be out of business by the time something breaks. The administration is promising to “stand behind new cars purchased from GM or Chrysler during this period … of uncertainty.” “No American should worry in buying a car from Chrysler, GM over this next period of time,” said the official, who added that the administration has no cost estimate for the “Warranty Commitment Program.” The administration also announced that to help the affected communities, it is naming a Director of Recovery for Auto Workers and Communities. The post will go to Edward Montgomery, a labor economist and former Deputy Secretary of Labor, whose job will be to “work to leverage all resources of government to support the workers, communities and regions that rely on the American auto industry.” In stark language, the administration’s five-page “Determination of Viability” for GM spells out the harsh findings: “General Motors has not satisfied the terms of its loan agreement. … It is strongly believed, however, that … a substantial restructuring will lead to a viable GM.” The five-page findings for Chrysler say: “Chrysler has not satisfied the terms of its loan agreement. … The Chrysler plan is not likely to lead to viability on a standalone basis.” Obama plans very tough rhetoric in his remarks Monday, with aides saying he will say explicitly that even greater sacrifice will be required from everyone involved with the auto industry. “That’s just the unfortunate fact of life,” the official said. “It doesn’t make any of us happy. But we view ourselves as the custodians of taxpayer dollars, and we really want to be sure that when they are put to work, they are put to work in a thoughtful way, with every expectation of recovery.” The companies can expect little leeway in the future. “Look, we are not trying to delay the outcome of this process,” the official said. “The president has established very firm, very clear, unambiguous, unchangeable deadlines and guidelines for which the government will invest new money. And we intend to stick to those. … I hope everyone on this call gets the fact that this is not business as usual. This is a new approach that we are very emphatic about. Having said that, we want to give these companies every opportunity to succeed.” Officials made it clear that Chrysler is much worse off than GM. “If you even look at Chrysler’s own viability submission, you’ll see that based on their own assumptions, they kind of eke it along,” the official said. “They really never generate positive cash flow. They’re never in a position, really, to pay down their debt. It’s not … a very realistic or workable place for a company to be.” The official said that the administration views GM, on the other hand, as “a much substantial collection of assets, a much more substantial collection of brands.” “If you look at things like Consumer Reports’ ranking of cars, you’ll see very great differences between those two companies,” the official continued. “General Motors' Malibu won the car of the year award last year. Chrysler has zero cars – no cars – that are recommended by Consumer Reports.” The official added: “There are certainly lots of fine Chrysler cars out there and we’re not trying to dissuade anyone from buying them. But we are attempting to make these viability assessments.” POLITICO’s Amie Parnes contributed to this report.

[Gomer Pyle]

Cant let these car companies go under. If they have to, merge them all into one and let the government take control. Shitty idea, but I'd rather there be American cars being made than no American cars at all.

[Timothy]

Well it's not just that. But also look at all the jobs that will be lost. From the Car makers to the people makign other things like Tires,ext.

[cousin it]

From a strategic perspective, it would be disastrous if GM or Chrysler failed.

[Mr. Roboto]

I just finished up what should have been a simple brake job on a PT Cruiser....this company makes shitty cars. That being said I'm surprised that this administration believes they (American car companies) are "small enough" to allow to fail. Maybe they are following the same model as financials that seem doomed: Pump enough money into them to allow them to be dismantled slowly as not to bring further havoc on our global economy. (

[cousin it]

Chrysler isn't your dad's MOPAR!

[Gomer Pyle]

Slightly off topic, but I almost bought a Corvette in late 07/early 08. Had always wanted one, and had went to a few dealerships in my area to do the usual test drive, bullshitting with the salesman,etc. Came awfully close to sealing the deal, and then thought.....do I REALLY need this? Decided to just stick with the car I've owned the past six years. A few months later, the economy goes down the tubes, price of gas shoots up again, and two of the three car lots I went to are now out of business. Read an article the other day that said in this current economic climate, its actually cheaper to buy a new car than it is a used car. Sounds enticing, but I'm definitely waiting until the dust settles before even thinking about buying a new car.

[Mr. Roboto]

I almost did the same thing with a house two years ago^^, sooooooo glad I did not, almost broke one of my own financial rules. Now, with new cars, I'm seeing some killer deals. I was talking to the Missus about this the other day. One car we saw had 0.9% financing, they paid the first three payments, and paid for all your maintenance for the first five years. HELLO????? That's a good fucking deal.

[Timothy]

Sound great but I bet there are some catches to it.^^ Almost pulled the trigger on buy a Ferrari last year.

[Mr. Roboto]

Ferrari, yea sure man.

[Timothy]

Hey it was used. not bad price.

[Mr. Roboto]

Even if you could swing the used price, the maintenance would leave you crying like a baby.

[Timothy]

that and insurance.

[Mr. Roboto]

There is insurance available for those cars on a DAILY basis. That's how high insurance can be.

[Bob]

Lets not talk about insurance. Cops love pull peeps over in them. the maintenance isn't that bad on them as long as you don't drive like an asshole and fuck something up on it. Also wouldn't recommended them for everyday driving.