Auto Bailout May Wind Up on Obama's Plate; Obama staff in contact with auto execs since October

[DeepModem Mom]

TIME: The Auto Bailout May Wind Up on Obama's Plate
By Jay Newton-Small / Washington
Wednesday, Dec. 03, 2008



President-elect Barack Obama's administration-in-waiting is quietly exploring options for negotiating a bailout of the ailing auto industry when the Democrat takes office in January. While no one is ruling out the possibility of Congress appropriating money next week, a senior Obama aide told TIME, there is a sense that a comprehensive solution is unlikely to come from whatever legislative action Congress may take before the end of the year.

For the moment, the CEOs of the Big Three car companies are focused on getting help from Washington sooner rather than later. Later this week, they return to Capitol Hill to make the case for why their companies deserve $34 billion in bridge loans to help rebound from staggering debt loads and enormous losses. Having failed to convince Congress last month, Ford's Alan Mulally, General Motors' Rick Wagoner and Chrysler's Robert Nardelli are scheduled to testify this Thursday and Friday to present detailed plans on how the American automobile industry can survive the current economic woes and even thrive into the future.

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid said two weeks ago that if the Banking Committees in both chambers approve the Big Three's recovery plans, they would consider reconvening the full Congress for a vote. But hashing out terms of what would amount to an unofficial Chapter 11 reorganization is highly unusual and unwieldy for Congress, especially a lame duck one. The executive branch is better built to handle such talks, and the incoming Obama administration is looking at all options: using money from the $700 billion Wall Street bailout, as many Democrats have been unsuccessfully arguing for; taking funds from the Federal Reserve; or tapping emergency monies similar to the stabilization fund Treasury used in the 1994 Mexico bailout.

Obama senior staff has been in contact with senior executives at all three car companies since October, the Obama aide said. The talks consist of phone calls, e-mails and meetings, and the companies have given a power-point presentation on their internal financials. "We're not negotiating with the auto companies; we're not saying to them, here's our plan," the Obama aide said. "We're just trying to listen and understand and study a range of options so that we're ready to move quickly and immediately."

What's unclear is if the Big Three, particularly GM, can last that long. While Ford, in the recovery plan it submitted Tuesday, said it can survive through 2009 without a loan — provided neither one of its two competitors go bankrupt and drag down the industry's entire supplier network — Chrysler asked for $7 billion in loans and GM said it would need $4 billion by the end of this month and upwards of another $14 billion next year to survive. All told, the companies have asked the federal government for $34 billion (including a $9 billion emergency line of credit Ford requested) — $9 billion more than they said they needed last month....

http://www.time.com/time/nation/article/0,8599,1863659,00.html?xid=site-cnn-partner