Frazzled wrote:I have argued why they can go bankrupt. Your failure to discern prudent management from imprudent management, and the negative PR effect this has is striking. There will be no bailout this year now.

Frazzled wrote:
For the record-yes sell or sublease the jets. That would have been step 1 two years ago. I've even banked those things in the past.

Frazzled wrote:1. GM was losing money for years, even before Katrina raised the price.

Frazzled wrote:
2. It is a glorious example of poor management at all levels. Marketing: abysmal; PR: abysmal; operations: abysmal. Its representative if their complete and utter failure to understand what cost control is. Sam Walton would never have done that. Kelleher would never have done that. Your average Japanese CEO would commit seppuku before being that stupid.

Frazzled wrote:Then forget GM and just give the money to the workers. Cut out the middle man.

Frazzled wrote:Then forget GM and just give the money to the workers. Cut out the middle man.

sebster wrote:

Frazzled wrote:Then forget GM and just give the money to the workers. Cut out the middle man.

So that’s it, is it? Your opinion of national economic comes down to disliking some corporate fatcats. Way to take the broad view there, Fraz.

Frazzled wrote:I'm not a Republican or a Democrat. You'd be surprised what my real views are.

Automakers Spend Hundreds of Millions on Jet Fleets
Congress Grills CEOs on Jets, But They Leave Washington the Same Way They Came
By BRIAN ROSS and JOSEPH RHEE
Nov. 20, 2008—


An ABC News investigation reveals that the top three automakers have together spent several hundred million dollars to buy, maintain, and operate a fleet of top-of-the-line private jets for their top executives.


The CEOs of Ford, GM, and Chrysler were on Capitol Hill again Wednesday, but this time they were met with a buzzsaw of criticism following an ABC News report that all three top executives flew to DC on private corporate jets to plead for $25 billion in taxpayer funding.


"It's almost like seeing the guy show up at the soup kitchen in a high hat and tuxedo," said Rep. Gary Ackerman (D-NY) at the hearing of the House Financial Services Committee. "It kind of makes you a little bit suspicious."


Despite the criticism, the three CEOs left Washington as they had arrived - on their luxurious corporate jets - a fact not unnoticed by the committee.


"I'm going to ask you to raise your hand if you're planning to sell your jet in place now and fly back commercial," asked Rep. Bradley Sherman (D-CA). "Let the record show no hands went up."


Business ethics experts say that there are plenty of legitimate reasons to travel on a corporate aircraft, but that in this case the CEOs did not set a good example.


"The symbolism of what they do is huge," said Professor Tom Donaldson of the Wharton Business School at the University of Pennsylvania. "Corporate jets are a symbol of money. Corporate jets are a symbol of the high life. And when your industry is going down the toilet pretty rapidly, that kind of symbolism is precisely wrong."


And members of Congress agreed.


"The fact that you flew in on your own private jet at tens of thousands of dollars just for you to make your way to Washington is a bit arrogant just before you ask the taxpayers for money," said Rep. Patrick Henry (R-NC) at Wednesday's hearing.


GM and Ford each have a fleet of private jets, with no plans to stop using them. They say it is corporate policy for their executives to travel by jets. Although GM's CEO Rick Wagoner said he might use his $36 million jet a bit less.


"To be perfectly honest," said Wagoner, "things have been so busy, I haven't been traveling a lot anyway."

Frazzled wrote:Ah so you're flinging insults about now? Its now reflecting several hundred million dollars for these private jets.

Since you're throwing insults I guess I can only reply that your ignorance is either the result of your inability to read common English, or you're covering for the auto industry executives for some unseen reason. Which is it?

Frazzled wrote:I see. I'm a worthless human being because I don't believe in a bailout. Ok.

Dems are postponing crucial vote on auto bailout
By KEN THOMAS AND JULIE HIRSCHFELD DAVIS
ASSOCIATED PRESS WRITERS

WASHINGTON -- Democratic leaders in Congress sidetracked legislation to bail out the auto industry Thursday and demanded the Big Three develop a plan assuring the money would make them economically viable.

"Until they show us the plan, we cannot show them the money," Speaker Nancy Pelosi, D-Calif., said at a hastily called news conference in the Capitol.

She and Senate Majority Leader Harry Reid, D-Nev., said Congress would return to work in early December to vote on legislation if General Motors Corp., Ford Motor Co. and Chrysler LLC produce an acceptable plan.

The decision averted a likely defeat of legislation providing $25 billion loans for the industry. Reid and Pelosi said there was no plan in circulation that could pass both houses of Congress and win President George W. Bush's approval.

While the decision headed off the defeat of one bill, it did not necessarily translate into passage of a different one.

As a result, the fate of hundreds of thousands of auto workers and even of an iconic American industry hang in the balance.

The chief executives of the Big Three automakers appealed personally to lawmakers for the loans this week, and warned that their industry might collapse without them. In testimony, they said their problem was that credit was unavailable, and not that they were manufacturing products that consumers had turned their backs on.

But whatever support they found sagged when it became known that each of them had flown into Washington aboard multimillion dollar corporate jets. Reid observed that was "difficult to explain" to taxpayers in his hometown of Searchlight, Nev.

The automakers are on a tight timeline. Reid and Pelosi said their plan must be turned over to key lawmakers by Dec. 2 They said hearings were possible the first week of December, and Congress may return to session the following week to consider legislation.

Pelosi stressed that whatever the Big Three provided to Congress, it must show they had a plan for "viability and accountability," meaning that the were transforming their industry in a way that it would become competitive, and that they were clear about how the federal loan money was used.

Even if lawmakers return to vote, they are likely to insist on numerous conditions on any loans. One possibility is to seek a partial ownership of the companies. Another is to limit salaries of top executives. A third is to prohibit use of the funds for any lobbying.

Until Democratic leaders reached their agreement, the bailout had appeared headed for defeat in Congress, with the fate of hundreds of thousands of workers and Detroit's once-venerable car companies in the balance.

Reid canceled plans for a vote on a bill to carve $25 billion in new loans out of the $700 billion Wall Street rescue fund. The Bush administration and congressional Republicans oppose that plan. They prefer tapping a different source of funds that is earmarked to help the industry produce vehicles that burn less gasoline. But using those funds drew opposition from Pelosi, as well as environmentalists.

Efforts on a compromise unfolded earlier in the day, and a small group of legislators circulated a proposal that would divert the fuel-efficiency money to cover the industry's short-term financial needs, while guaranteeing that account would ultimately be replenished.

With all sides sensing doom for a Big Three automaker rescue, the finger-pointing proceeded.

White House press secretary Dana Perino on Thursday blamed Reid for not allowing the Republicans' separate auto-aid plan to come up for a vote.

"Unfortunately it looks like Sen. Reid just wants to pick up his ball and go home for the next two weeks - two months - for vacation," she said.

Pressed on what the White House would do if Congress can't agree on a plan to rescue the automakers this week, Perino said she thought lawmakers would return after the Thanksgiving holiday for an emergency legislative session if an auto company was in imminent danger of collapsing.

"I can't imagine a scenario where they wouldn't come back, unless the answer is that they just don't care. And if that's the case, then the American people ought to know that."

Congressional Democrats countered that the Treasury Department already had the power to grant emergency funds to the automakers, but the Bush administration opposed the approach.

The leaders of the Big Three automakers painted a grim picture of their financial position during two days of congressional hearings, warning that the collapse of the auto industry could lead to the loss of 3 million jobs. Detroit's automakers, hurt by a sharp drop in sales and a nearly frozen credit market, burned through nearly $18 billion in cash reserves during the last quarter - about $7 billion at GM, almost $8 billion at Ford and $3 billion at Chrysler. GM and Chrysler said they could collapse in weeks.

"I don't believe we have the luxury of a lot of time," GM CEO Rick Wagoner told a House hearing.

Alan Mulally, the CEO of Ford Motor Co., said the company had enough cash reserves to make it through 2009. But United Auto Workers union president Ron Gettelfinger said a bankruptcy could spawn others.

"If there's a Chapter 11 (for) one of the companies, it will drag at least one other with them, if not all of them. And I do not believe Chapter 11 is where it will end. It will go to liquidation," Gettelfinger said.

Automakers ran into more resistance from House lawmakers, who chastised the executives for fighting tougher fuel-efficiency standards in the past and questioned their use of private jets while at the same time seeking government handouts.

"My fear is that you're going to take this money and continue the same stupid decisions you've made for 25 years," said Rep. Michael Capuano, D-Mass.

The stakes are high. The Detroit automakers employ nearly a quarter-million workers, and more than 730,000 other workers produce materials and parts that go into cars. About 1 million more people work in dealerships nationwide. If just one of the automakers declared bankruptcy, some estimates put U.S. job losses next year as high as 2.5 million.

---

Associated Press writers David Espo and Sam Hananel in Washington and Tom Krisher in Detroit contributed to this report.

Frazzled wrote:Way to try to put words into my mouth Sebster. Do you pay income taxes by the way?

Frazzled wrote:I'm not a Republican or a Democrat. You'd be surprised what my real views are.

lord_sutekh wrote:That'd be a wonderful idea... except you'd actually have management and the unions agreeing for once on something. Less companies means less blue- AND white-collar jobs to go around. I'm not saying that it isn't the ultimate way that it should go; I'm just saying that there's gonna be a lot of kicking, biting, and screaming along the way.

Obama Transition Said to Consider a ‘Prepack’ Auto Bankruptcy

By Linda Sandler and Jeff Green

Nov. 21 (Bloomberg) -- President-Elect Barack Obama‘s transition team is exploring a swift, prepackaged bankruptcy for automakers as a possible solution to the industry’s financial crisis, according to a person familiar with the matter.

Obama’s team has already contacted at least one bankruptcy- law firm to say that Daniel Tarullo, a professor at Georgetown University’s law school who heads Obama’s economic policy working group, would call to discuss the workings of a so-called prepack, according to this person.

U.S. lawmakers yesterday postponed until December a vote on whether to give General Motors Corp., Ford Motor Co. and Chrysler LLC a $25 billion bailout as an alternative. Automakers such as GM could use court protection to reduce debt and reject unfavorable contracts.

“It creates the environment to deal with GM’s problems but limits government financial commitment,” said bankruptcy lawyer Mark Bane of Ropes & Gray in New York.

Tarullo referred the matter to the transition team press office. Team spokeswoman Stephanie Cutter said, “We have not put out anything specific for the auto industry except that something needs to be done immediately.”

GM, the largest U.S. automaker, said it might run out of cash as early as the end of the year and that the risk was even greater by mid-2009. GM Chief Executive Officer Rick Wagoner said this week GM would have to liquidate if it went into bankruptcy.

The automaker probably has weeks rather than months left before it runs out of money unless it gets federal aid, Jerome York, an adviser to billionaire Kirk Kerkorian and a former GM board member, told Bloomberg Television yesterday.

How Prepacks Work

In a prepackaged bankruptcy, an automaker would go into court with financing in hand after reaching agreement with lenders, workers and suppliers on what each would give up and on the business plan to be followed. The process might take six to 12 months, compared with two to five years if the automakers followed an ordinary Chapter 11 proceeding and worked out agreements under a judge’s supervision, Bane said.

Automakers would have to depend on government financing to restructure in bankruptcy court and probably couldn’t attract private loans until they were ready to emerge from the process, Bane said.

Officials of the three automakers told members of Congress this week that they had studied a pre-arranged bankruptcy, championed by Republican lawmakers such as Senator Bob Corker of Tennessee, before dismissing the idea as unworkable.

“We have looked at all aspects, whether it’s a prepackage, whether it’s prenegotiated,” Chrysler CEO Robert Nardelli told a Senate committee on Nov. 18. The options are all “more negative” than restructuring as a condition of receiving federal aid, he said.

Prepacks Rejected

Wagoner and Alan Mulally, CEO of Dearborn, Michigan-based Ford, also said under congressional questioning that their companies had studied and rejected the idea of reorganizing under court protection.

House Speaker Nancy Pelosi said yesterday that Democrats reject bankruptcy as an option.

In or out of court, automakers will have to submit a viable business plan to gain government funds, Peter Peterson, senior chairman of Blackstone Group LP, said in an interview.

“Unless they can show us the plan, we can’t show them the money,” Pelosi said yesterday.

GM, Ford and Chrysler must submit viability plans by Dec. 2, and Congress would meet the week of Dec. 8 to consider aid, Senate Majority Leader Harry Reid said yesterday. Congress must see accountability from automakers, Pelosi said.

The congressional deadlock was triggered by disagreement over how to pay for the $25 billion the Big Three automakers are seeking.

Democrats’ Position

Democratic leaders have demanded that the recently approved $700 billion bank-rescue fund be tapped for the auto aid. Their plan stalled with opposition from Republicans and President George W. Bush‘s administration.

The Bush administration joined Levin, Missouri Republican Senator Christopher Bond and others pushing the alternative that would tap the fuel-efficiency loans instead.

“There are other alternatives” to a bridge loan for automakers, Senate Financial Services Chairman Christopher Dodd, a Connecticut Democrat, told reporters yesterday. “The prepackaged bankruptcy is not an idea without constituency here.”

A GM bankruptcy is the “only way” for the biggest U.S. automaker to end union costs that make it uncompetitive, Republican Senator James DeMint of South Carolina said in an interview on Bloomberg Radio.

‘Logical Step’

“I look at the Republicans that say it shouldn’t be saved and should be in Chapter 11, and I agree with that,” said James Harris, President of Seneca Financial Group Inc., a restructuring advisory firm in New York. “I look at the Democrats that say these businesses are very important to the economy, and I agree with that, so the logical step is a prepack,” with some government financing, he said.

Treasury Secretary Henry Paulson said the $700 billion of the Troubled Asset Relief Program shouldn’t be used to rescue automakers. “There are other ways,” he said at a Nov. 18 House hearing. Treasury Department spokeswoman Brookly McLaughlin declined to comment on the prepack proposal.

The collapse of GM would cost the government as much as $200 billion should the biggest U.S. automaker be forced to liquidate, Nariman Behravesh, chief economist at IHS Global Insight Inc. in Lexington, Massachusetts, estimates.

A GM failure would mean “more aid to specific states like Michigan, Ohio, and Indiana, and more money into unemployment and extended benefits,” Behravesh said Nov. 15.

‘Scary’

The domino effect could be “scary,” said bankruptcy lawyer Martin Bienenstock of Dewey & LeBoeuf who teaches corporate reorganization at Harvard Law School and the University of Michigan Law School.

Bankruptcy would trigger failures of auto parts suppliers and dealerships, he said. Securitized auto loans and their insurers would fail, creating ripples through the credit markets, he said.

“The difficulty is assuring the American people that the bailout money won’t simply defer the company’s failure for six to 12 months,” Bienenstock said.

To contact the reporter on this story: Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net