Money | 12/09/2008 8:30 am

Pelosi: Americans Should Think of Auto Bailout as 'Last Chance' for Industry (Video)

By The Staff at wowOwow.com

MSNBC

Nancy Pelosi says the House of Representatives is working hard to get an economic stimulus package ready by the time Barack Obama takes office in January, and they may be close to a bailout deal for the nation’s Big 3 automakers.

Appearing on NBC’s “The Today Show” Tuesday morning, the speaker of the House said her chamber will have the bill ready on time – let’s see if the Senate follows.

"This is a priority" for Democrats, Pelosi said, adding that "we have been begging" for more than a year to do this. It’s thought this stimulus package will cost more than the $168 billion one enacted last year.

Pelosi also said she likes the idea of a “car czar” to supervise an auto-industry bailout. Many lawmakers agree that the top executives at Ford, GM and Chrysler haven’t adapted their businesses well to changing economic conditions, and that someone needs to essentially babysit them and review any transaction or contract valued at more than $25 million.

"I think it’s very important," said Pelosi, D-CA, arguing that little would be accomplished if company executives were on their own, "because left to their own devices, it’s clear that the auto industry has not taken the initiative."

"I would want the czar appointed before one dollar went out."

She said somebody like former Federal Reserve Chairman Paul Volcker would be a good candidate.

GM’s vice president of global product development, Robert Lutz, also said he could accept a car czar.

"Whether we need it or not, I think it’s reasonable that when the federal government steps in with taxpayer money, they’re not going to — they’re not going to lend us the money and just say, ‘Do the best you can with it and tell us when you need more.’ Obviously, there’s going to be some kind of oversight and I think that’s a reasonable thing to expect," he said on CBS’s "The Early Show."

Congressional Democrats and the White House have been talking for days to finalize an estimated $15 billion emergency bridge loan package for the car companies. They could get more money if they prove they are using the first cash infusion wisely.

The Wall Street Journal says the negotiations could results in the U.S. government taking a substantial ownership stake in the industry and a central role in its restructuring. Sound familiar?

From WSJ:

Under terms of the draft legislation, which continued to evolve Monday evening, the government would receive warrants for stock equivalent to at least 20 percent of the loans any company receives. The company also would have to agree to limits on executive compensation and dividend payments, much like those contained in the government’s $700 billion rescue of the financial industry.

The Washington Post says if this plan passes, the Treasury Department would cut checks for the car companies as soon as next week.

Pelosi said taxpayers should consider the government help "a last chance" for the industry, rather than a bailout.

8 Reader Comments (so far…) Sign In or Register to comment

The bailout should be saddled with major restrictions on what the Big 3 produce. No more SUV’s, big hog trucks etc. they need to get with the 21st century and get their heads out of the 1950’s gas-guzzling hogs they keep producing. Japan and Korea and even the Norwegians have overtaken and gone way past them on the electric car. This is short-sightedness and inept planning on the Big 3’s part. Bail them I agree but with these major restrictions. The electric car is the way of the future and Detroit needs to belatedly get on the bandwagon.

By f p on 12/09/2008 9:32 am

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Or…let them produce turbines for the windmills, throw them a bone or two when it comes to government contracts. I can’t believe we’ve been fighting two wars for years, now, and not a single government contract was given to the auto industry. What’s up with that?

By Ms. Dee on 12/09/2008 10:08 am

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Ms. Dee, when you fight a war, you want to minimize your side’s deaths. Giving contracts to outdated (or maybe even never-dated) business models get’s you nowhere at great cost. Hmm, kind of like trying to fix them by throwing money at them. This is B.S.! Let ‘em fail. BTW: Heard on the news yesterday that >50% of the “homeowners” who got their mortgages re-evaluated/fixed to be easier on them are defaulting on the new mortgage… another good reason to throw money at failed business models (in this case, someone buying a house they cannot possibly afford in the real world).

By John G on 12/09/2008 10:37 am

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That’s the half empty/half full way of looking at things John. 50% who got re-evaluated are not defaulting, maybe they just have to be more careful when doing the evaluations and look for the ones who are truly making an effort.

By Sandbee (FB) 54 on 12/09/2008 11:28 am

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Seems to me we still have gone a very short distance at an enormous cost. It’s just that Halliburton and other Bush/Cheney cronies took off with all the marbles…unless you want to count the billions they just lost track of.

By Ms. Dee on 12/09/2008 12:23 pm

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John I’m so sold on your explaination and couldn’t agree more. This is all bs in my opinion and the bone we’re getting thrown is the “Bailout Czar” what a crock of crap that is! Firstly, common sense would tell one that if you need a”Police force” to ensure you are doing your job then that would hopefully send out a message to those with a brain to realize that these idiots can”t be trusted in the first place and have no buisness in buisness. This just handing money out I will gaurantee, the absolute demise of this country as we knew it, Period. I too, also heard the figures on the re evaluated mortgages and just somehow must admit I was no shocked in the least as these people could never have afforded these loans in the first place. What’s the old saying “A dog always returns to his own vomit”

By HA BIBI on 12/09/2008 11:39 am

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Nancy Peolsi is absolutely right; a car czar is exactly what is needed. The auto makers can’t on one hand ask for money from the government because their businesses are failing, yet on the other hand expect Americans to do so with no assurances that the same failed business policies won’t continue. Someone, as said, needs to baby-sit them and make sure they are acting responsibly. I also like the distinction she made in regard to taxpayers considering this as government help “a last chance” for the industry, rather than a bailout. I’m hearing and reading to many people call this a bail out. We need to get to a place where we call it what it is….their last chance.

By Belinda Joy on 12/09/2008 6:32 pm

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Car Tsar? At least it rhymes, can count on the govt. to come with a catchy name. The condition of of these companies should be between the companies and their creditors. The Congress of the United States, In my opinion. does not have the authority to act on the matter under discussion: Reference: Constitution of the United States (job description for congress) The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; To borrow money on the credit of the United States; To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes; To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States; To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures; To provide for the Punishment of counterfeiting the Securities and current Coin of the United States; To establish Post Offices and Post Roads; To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries; To constitute Tribunals inferior to the supreme Court; To define and punish Piracies and Felonies committed on the high Seas, and Offenses against the Law of Nations; To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water; To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years; To provide and maintain a Navy; To make Rules for the Government and Regulation of the land and naval Forces; To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions; To provide for organizing, arming, and disciplining the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress; To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings; And To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

By Alex Moseley on 12/09/2008 8:23 pm