"Nothing concentrates the mind like a death sentence and we're looking at a death sentence," Sen. Christopher Dodd (D-Conn.) told executives of America's largest automakers in a hearing yesterday on whether to provide aid to the struggling auto industry. In exchange for approving an aid package, the AP reports, lawmakers are beginning to demand "a major restructuring of Detroit's struggling Big Three auto companies."
Senators resurrected the recently-abandoned idea of a merger between once mighty GM and Chrysler as a possible pre-condition for a deal. The Detroit Free Press reports, "Sen. Robert Bennett (R-Utah) broached the idea of requiring a merger, saying he thought it made sense, especially after Chrysler Chief Executive Officer Bob Nardelli estimated it could save as much as $10 billion a year." The chief executives of both companies said they were open to the idea. The move, which would see publicly-held GM take over all of privately-owned Chrysler's automotive operations, might eliminate a concern some in Congress seem to have over giving a government bailout to a private company. Sen. Bob Corker (R-Tenn.) told the executives he was reluctant to endorse government aid short of a merger because Cerberus Capital Management "owns 80% of [Chrysler] and has cash -- lots of cash -- that they are unwilling to put into this company."
A separate AP report notes that "several lawmakers in both parties" are urging automakers "to consider a pre-negotiated bankruptcy." Under such a proposal, an automaker would negotiate agreements with its creditors and suppliers, as well as with the government, on a recovery plan, then declare bankruptcy and ask the bankruptcy court to make the agreements legally binding. The government would then give the automaker cash to fund the recovery. Both GM and Chrysler are said to "have consistently shunned" that option, but "members of Congress and the Big Three both were contemplating a government-run restructuring that would yield similar results, including massive downsizing and labor givebacks."
But any bailout proposal faces a greater danger than skeptical members of Congress. It faces a skeptical American public. The Boston Globe reports, "A clear majority of Americans oppose loaning taxpayers' money to prop up the Big Three auto companies, according to a new poll out today. The CNN/Opinion Research Corp. survey found that 61 percent are against the loans, while 36 percent support them. The poll also found 53 percent who said they don't believe that aiding the automakers would help the broader economy."
The automakers are taking to the web to make their case. The Wall Street Journal reports, "Ford Motor, General Motors and Chrysler have launched campaigns on several Web sites, including Google and its YouTube video site, various blogs, Facebook and the social-messaging site Twitter, trying to make their case for a bailout as quickly and widely as possible -- on the cheap."
They need to work fast. Congressional leaders are expected to decide today whether to call Congress back into session to vote on an auto bailout plan next week.
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