Industry aid fails in the Senate

Stijloor

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From "Automotive News."

Stijloor.


Industry aid fails in the Senate

Reid predicts a "very, very bad Christmas for many Americans"

Harry Stoffer
Automotive News
December 11, 2008 - 10:43 pm ET
UPDATED: 12/11/08 11:57 p.m EST



WASHINGTON -- A bill to provide emergency loans to Detroit automakers is dead for now, Senate Majority Leader Harry Reid said late Thursday.

"We have not been able to get this over the finish line," Reid said.

Reid said he dreads what will happen on Wall Street on Friday. "It's not going to be a pretty sight,'' he said. He also said the failure of negotiations will mean a "a very, very bad Christmas" for many Americans.

General Motors and Chrysler LLC say they need federal loans to avoid running out of cash within weeks.

``We are deeply disappointed that agreement could not be reached tonight in the Senate despite the best bipartisan efforts,'' GM said in a statement. ``We will assess all of our options to continue our restructuring and to obtain the means to weather the current economic crisis.''

Economists, researchers and some lawmakers have warned that failure of one or more of the car companies will shatter a U.S. economy already in recession.

Markets across the Asia-Pacific region were down more than three percent after news the talks had collapsed, with Japan's Nikkei average and Hong Kong's Hang Seng both down more than five percent.

U.S. crude prices fell by nearly $2 to $46.11 a barrel.

The White House said it would evaluate its options in light of the collapse of the bailout legislation.

White House spokesman Tony Fratto declined to say what those options included. The Bush administration has resisted Democrats' past demands to use some money from the $700 billion bailout package approved in October to help struggling financial institutions to help the automakers.

Reid's assessment followed a day of negotiations in which senators tried to reconcile a House-passed bill that had been negotiated by the Bush White House and Democratic leaders of Congress with an alternative favored by some Senate Republicans.

Sen. Mitch McConnell of Kentucky, the Republican leader, blamed the UAW for being unwilling to accept GOP demands that Detroit 3 workers accept parity in pay, benefits and work rules with import-brand factory employees.

Sen. Bob Corker, R-Tenn., author of the GOP alternative, said workers would not accept a deadline for the parity demand.

"We are three words away" from a deal, Corker said.

Senate Banking Chairman Christopher Dodd, D-Conn., said the failure of negotiations was political, but he worries what it will mean for the broader economy.

Together the Detroit 3 CEOs say they need at least $34 billion in federal money to get through the economic downturn.

A subsequent procedural vote confirmed Reid's assessments. Sixty "yes" votes were needed to move ahead with industry-aid legislation. The vote was 52-35 in favor of aid.

Some options for the industry remain.

Congress could come back early next year -- when Democrats have a wider majority in the Senate -- with new legislation.

Or the Bush administration could relent and decide at any time to make direct loans to automakers from the $700 billion that has been approved for rescue of the financial system.

Democratic lawmakers have maintained all along that the administration had that authority. Reid reaffirmed that view Thursday night.

Some lawmakers have contended that the Federal Reserve always has authority under laws enacted during the Great Depression to make emergency loans to almost any economically important entity that can't get credit elsewhere.

Reuters contributed to this report
 

Marc

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Biggest problem (my opinion) was the stuff that was being embedded into the bill. Too many politicians wanted a 'rider' for totally unrelated things like raises for certain judges and a transportation company tax provision change to exempt some aspects from being classified as tax shelters by the IRS.

They need a 'clean' bill. But the chances of that are.... NIL (aka > devnul)

And, of course, the GOP wants bigger concessions from the unions. The GOP wants unions busted. Period.
 

Manix

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I have read from a news wire that (MSN):

Senator Bob Corker, the Republican leader in the talks, said the two sides had been tantalisingly close to a deal, but the UAW's refusal to agree wage concessions by a specific date in 2009 kept them apart.
The car workers' contract does not expire until 2011.

Are the UAW really this short sighted? Or is the trouble the big 3 are in really just been over hyped and the UAW knw something everyone else doesn't? Do they sit there and say "everything goin' be OK boys, we got it under control". They fail to reach an agreement their members might have more to deal with than some wage concessions!!

Don't know enough to comment further but in my view, the unions have a pair of hands in the messy pie, that is the US (global) auto crisis.
 

Coury Ferguson

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That was the main reason for failure. The UAW didn't want to make any concessions (what I heard on the News this morning). I guess they don't realize that there could be a lot more people out of a job if the Bail out is not passed.

My personal feelings is that the Big 3 shouldn't be bailed out (don't take this the wrong way UAW. I have nothing against Unions I was a Teamster once). Let them reorganize. Maybe they will realize that they need to make better designs in their vehicles than just make a slight change to the design or even just a name change (Like Blazer to Trailblazer) to the specific vehicle.
 
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Stijloor

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Super Moderator
Breaking News from the New York Times!

White House to Consider Use of Funds to Aid Automakers

In a shift, the White House said on Friday that it would
consider using money from the $700 billion financial bailout
to help automakers after the Senate abandoned a rescue bill.
 

SteelMaiden

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Why would we give more money to Chrysler, when we've already bailed them out before? I think they should be shot down. No reason to pour more money into a corporation that was too stupid to learn from their mistakes the first time. So long, and good riddance, imho.

Chrysler paid it all back with interest (Under Lee Iacocca). The clods running the place are not the same guys from that time period. Chrysler also got raped by their former partner (Daimler).

Honestly the president should do kinda what Truman and Reagan did in other industries, declare the auto industry vital to the nations security, flush the leadership, toss out all those Director boards, de-certify the union agreements (or mandate open-shops like many of the southern states have), put rigid oversight in place (Give it all to Iacocca...he proved he can put a good team and plan together before so why re-invent the wheel?), eliminate the job banks, eliminate the bs employee or retired "perks" and build cars that people will buy.
 
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Stijloor

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Super Moderator
Why would we give more money to Chrysler, when we've already bailed them out before? I think they should be shot down. No reason to pour more money into a corporation that was too stupid to learn from their mistakes the first time. So long, and good riddance, imho.

Well, Chrysler is now owned by money-men (Cerberus). And why should they give up an opportunity to feed at the (broken link removed)....

Stijloor.
 

Marc

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Are the UAW really this short sighted?
As upper management has grown fat, for quite a few years now the unions have been giving concessions. Look back to the 1980's when Reagan fired all the air traffic controllers to bust their union.

The blame is typically put on the union workers when ever money comes up. It's not just automotive. Unions have been beat up and forced into giving concessions in all industries for quite a few years now. An example is the airline pilots union. As unions continue to be broken, wages all over for the blue collars goes down, while upper management get high 6 digit or even into 7 digit salaries (usually with some type of Golden Parachute).

Somehow it always seems to be the fault of the unions and the blue collar workers when a company is having profitability problems. It won't stop until health care benefits are eliminated and workers are making minimum wage or less. Even should it reach that, upper management will still find a way to blame the blue collars for the failures of upper management.
 

Jen Kirley

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Why would we give more money to Chrysler, when we've already bailed them out before? I think they should be shot down. No reason to pour more money into a corporation that was too stupid to learn from their mistakes the first time. So long, and good riddance, imho.

Chrysler paid it all back with interest (Under Lee Iacocca). The clods running the place are not the same guys from that time period. Chrysler also got raped by their former partner (Daimler).

Honestly the president should do kinda what Truman and Reagan did in other industries, declare the auto industry vital to the nations security, flush the leadership, toss out all those Director boards, de-certify the union agreements (or mandate open-shops like many of the southern states have), put rigid oversight in place (Give it all to Iacocca...he proved he can put a good team and plan together before so why re-invent the wheel?), eliminate the job banks, eliminate the bs employee or retired "perks" and build cars that people will buy.
It's really a shame to see so many people push for an end to retirement benefits. I have a 401K plan that at present would render enough cash to keep me in peanut butter. I have no plans to retire, ever, unless I win the lottery. In any case, many wage changes have already been made.

I do agree with the wish for another Lee Iococca - where is the leadership? It is so hard to give faith to executives that decided to focus on big vehicles in spite of all the indicators showing it wasn't a sound plan.
 
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