U.S. auto CEOs seek $50 bln in federal aid: sources
Written on November 7, 2008
Chief executives of distressed U.S. auto companies sought a $50 billion federal bailout on Thursday to survive a financial crisis blamed on a worsening economy and the “near collapse” in demand for cars.
Rick Wagoner of General Motors Corp, Alan Mulally of Ford Motor Co and Bob Nardelli of Chrysler LLC wore heavy faces while trudging through the deserted halls of Congress where they held long meetings with House Speaker Nancy Pelosi and Senate leader Harry Reid.
The three executives took back stairways and side elevators to avoid reporters, and said nothing when approached. Wagoner and Mulally were reluctant to talk ahead of Friday’s quarterly earnings, which analysts expect to be dismal.
GM and Ford said in separate statements their meetings with Reid and Pelosi were frank and constructive. GM called for “immediate funding,” while the United Auto Workers (UAW) said there was “an urgent need” for federal assistance.
It is unclear whether Congress can or is willing to put together a package of loans with virtually no time remaining on the legislative calendar and an overall reluctance by the White House to bail out Detroit.
Pelosi said before the meeting that government needed to “ensure the viability” of the U.S. auto sector, which experienced a 30 percent drop in sales in October and is losing billions by the month.
Industry sources with knowledge of company and labor priorities said carmakers and their union want the government to extend borrowing for $25 billion in emergency capital and another $25 billion for a health care trust to meet obligations for more than 780,000 retirees and their dependents everyone approved 1 hour payday loans.
The UAW has said government investment in the trust would free up corporate capital to spend on pressing needs.
One of the sources said discussions touched on company givebacks. The government has agreed to assume preferred shares and warrants in recent bank bailouts but it is unclear if that would be accepted in this case. The UAW wants limits on executive compensation as part of a bailout for the auto industry.
While Reid said Congress would “continue to explore” ways to help the industry, he nevertheless called on the Bush administration to take action on its own.
“All parties strongly encourage the administration to exercise that authority,” Reid said.
Automakers have sought to borrow from the Federal Reserve as well as receive capital injections from the Treasury Department under the ongoing corporate rescue program. Both government entities have extended some assistance in recent weeks to automaker lending arms to stimulate consumer borrowing.
“The U.S. Treasury and the Federal Reserve can help immediately by taking steps to provide liquidity to auto manufacturers so they can get through the difficulties caused by an across-the-board decline in auto sales,” UAW President Ron Gettelfinger said in a statement.
Gettelfinger attended the meetings.
Last week the administration rejected GM’s proposal for capital from the Treasury to help it finance a possible merger with Chrysler.
Filed in: management.