Results tagged “autobailout”

The Treasury Department is increasing its aid to the automobile industry by throwing an extra $6 billion to the already-promised $17.4 billion. The additional funding is, per Politico, "chiefly to help the financial arm of General Motors Corp.": "Treasury will purchase $5 billion in senior preferred equity from GMAC LLC, and up to $1 billion more will be lent to GM itself so the automaker can participate in a rights offering at GMAC, which has wanted to reorganize itself as a bank holding company." The NY Times, which calls GMAC a "crucial source of automobile sales financing," adds that the company's transformation into a bank holding company allows it "borrow money at low rates" from the Fed. The hope is that GM's auto sales can be spurred, but one investment manager told Bloomberg News, "Philosophically, I'm not very happy about the fact that the government has to save an auto-finance company because management ran it into the ground."

While the White House signaled it would be ready to step in and help the auto industry after the Senate failed to pass a $14 billion bailout package for the Big Three, President Bush told reporters, "We're not quite ready to announce that yet." And when asked he would use money from the TARP (the earlier $700 billion financial industry) bailout, he added, "I signaled that that's a possibility." Stock futures are, according to CNBC, "uncertain...amid a dismal manufacturing report and" auto bailout anxiety. Still, lawmakers believe there will be relief for Detroit; Sen. Bob Corker says the Treasury Dept. was talking to automakers over the weekend.

The White House signaled it might use TARP money (the earlier $700 billion bailout) to help out the Big Three. White House spokeswoman Dana Perino said, "Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms. However, given the current weakened state of the U.S. economy, we will consider other options if necessary — including use of the TARP program — to prevent a collapse of troubled automakers.” The Treasury Department also signaled it could help prop up the automakers, and that helped the Dow, Nasdaq and S&P 500 stay in positive territory. Also interesting: CNBC has a chart showing not just the one-day and one-week changes for stock market but the year-to-date change, too: The Dow is off by 35% for the year.

of cash left to keep operating. However, it's now a "race against the clock," because it appears it may fall short of the 60 votes needed to pass it as Senate Republicans have voiced opposition to the plan (they think the "Car Czar," appointed to oversee the plan, doesn't have enough authority). Rep. John Dingell (D-Michigan) said, "Without this bridge, we’re going to fall into the biggest calamity this country has known since the Great Depression. A terrible disaster looms."

U.S. stock futures were up, thanks to the belief lawmakers will approve the $15 billion bailout plan for the Big Three automakers. The vote will be held today; the deal reportedly includes bridge loans (from money originally for the Energy Dept..) and having a "Car Czar" who will oversee negotiation of a restructuring by 3/31/09. Sen. Carl Levin (D-Michigan) said, "Bipartisan hard work has paid off. I understand an agreement has been reached." However, Donald Trump told CNBC the U.S. should save the auto industry but put them through Chapter 11 bankruptcy.

The Dow Jones went over 9,000 but ended the day at 8,930 points, gaining almost 300 points (+3.46%). The Nasdaq rose over 4% and S&P 500 ended 3.84% up, as investors were hopeful about the government bailing out automakers to the tune of $15 billion. The White House has reportedly received a draft of a bill from Congress, and the Senate Majority Leader Harry Reid said passage would be possible if "senators are willing to work together in the next few days." The bill would help the Big Three automakers stay in business for a few months; Rep. Barney Frank said $15 billion was not enough but "It's better than nothing."