The bailout loan's no longer just a $15 billion bridge loan for the not-so-Big Three to make it until the Obama administration, it's actually "bankruptcy lite." It's also a really good idea.
Take a look at the stakeholders in the $15 billion bridge loan legislation for the Detroit automakers and you'll see why there's no clear message coming from anyone on the not-a-bailout; the automakers no longer have clout in D.C., the House Democrats seem fixated on making the not-so-Big Three into "Big Green," House Republicans are busy offering an alternative non-"ass-backwards" plan in the House that would have the Feds provide insurance which would cover up to 50% of losses of new investment in case of a default or bankruptcy. Senate Republicans, led by Sen. Shelby (R-Foreign Autobama) on the other hand are just eager to find a way to kill the UAW with some cockamamie scheme similar to House Republicans.
We guess given every other stakeholder's got both hands tied behind their backs (mostly of their own doing) or is completely without a clue when it comes to economics (Sens. Shelby and Ensign, we're looking at you), we shouldn't be surprised it was the lame duck White House that would actually craft a realistic message on the proposed bill. In the span of one press conference, White House Deputy Chief of Staff for Policy Joel Kaplan changed the message of the bill being a bridge loan for the not-so-Big Three to make it to the waiting hands of the Obama administration into what it should have been all along — "bankruptcy lite."
What this "bankruptcy lite" bill would provide the short-term financing the Detroit automakers need to give them an opportunity to do what we've said they need to do, take a few months to work with all the parties — UAW, dealers, suppliers, etc. — and get a realistic cost structure put in place before March 31st, 2009. At that time the "car czar" appointed by the President would either accept the plan presented by GM and Chrysler, come up with his own plan, or say "screw you two" to both and call back the collateral put down for the loan.
The plan makes sense to us, and it probably makes sense to the American people.
Photo Credit: CHRIS KLEPONIS / AFP
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