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Automakers seek additional $50 billion in loans
By KEN THOMAS – 14 hours ago
WASHINGTON (AP) — Struggling U.S. automakers are requesting an additional $50 billion in new loans from Congress to help them survive tough economic conditions and pay for health care obligations for retirees, officials said Friday.
A day after the leaders of Detroit's auto companies and the president of the UAW huddled with House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., participants in the meeting said the figure discussed was double the $25 billion they want to cover future health care payments for about 780,000 retirees and their dependents.
Automakers want the new loans included in an economic stimulus package that is now more likely to come together early next year rather than in a post-election lame-duck session of Congress later this month. The $50 billion would be in addition to the $25 billion in loans that Congress passed in September to help retool auto plants to build more fuel-efficient vehicles.
The requests come as auto companies are bleeding cash and jobs. General Motors Corp. and Ford Motor Co. reported Friday that they spent down their cash reserves by a combined $14.6 billion the past three months. Ford said it would slash more than 2,000 white collar jobs.
President-elect Obama said Friday his transition team would explore policy options to help the auto industry. He didn't specifically address the industry's new loan requests but said their hardships affect small businesses and auto suppliers.
"The auto industry is the backbone of American manufacturers and a critical part of our attempt to reduce our dependence on foreign oil," Obama said, speaking in Chicago in his first news conference as president-elect.
Obama's economic transition team includes two allies of the U.S. auto industry — Michigan Gov. Jennifer Granholm and former Rep. David Bonior, D-Mich.
"We are going to be working on how to make sure over the next short period of time and longer period of time this industry succeeds," Granholm said.
During Thursday's meetings, the top executives of General Motors, Ford and Chrysler LLC and the president of the UAW discussed up to $50 billion in loans, participants said. The loans would include $25 billion to help the companies withstand the weak economy and another $25 billion for future.
If Congress approved more loans, it would come with strings attached. Potential protections include limits on executive compensation, awarding the government preferred stock in the companies and a suspension of dividend payments to investors.
Rep. Sander Levin, D-Mich., said lawmakers are focusing on the immediate infusion of $25 billion to help the companies maintain their business operations in the tough economy. He said House leaders are considering amending last month's $700 billion financial industry bailout so that automakers could access it.
"It was a very full and frank discussion which I think ended on a positive note — that action is essential and essential this month," Levin said.
Two business groups, the U.S. Chamber of Commerce and the National Association of Manufacturers, urged Congress to provide immediate support to the industry.
In Chicago, Obama also urged the Bush administration to "do everything it can" to speed up the distribution of $25 billion in loans approved in September to help automakers retool factories for fuel-efficient vehicles.
Congress approved the low-interest loans for U.S. automakers and auto suppliers to help them build more fuel-efficient cars and meet tougher fuel economy standards. But the funding is not expected until sometime next year.
Energy Department spokeswoman Healy Baumgardner noted the agency announced interim rules for the program on Wednesday and said the agency "has done its best to accelerate funding within the confines of the law Congress passed."
Asked about the automakers' meetings on Capitol Hill, White House spokesman Tony Fratto said they were concerned about the "health of the auto industry" but Congress would need to decide whether to provide more help beyond the $25 billion loan program for fuel-efficient cars.
Why should we give struggling companies money because they failed to adapt to the market and poured shitty cars down our throats that got horrible MPG. You don't see the foreign manufacturers doing bad.
This car was made back in '98 that got 70+ MPG. Sure it looks bad, but driving a 20 MPG car won't get you very far for cheap compared to this thing.
Mercedes C250 (CDI)
Acceleration: 0-60 in 7 seconds
Top Speed: 155 mph
Fuel Consumption: 45 mpg
Supporting these big "three" companies because they churned out crap cars and failed to adapt or revolutionize even when times were good is their fault and we should not support giving them any money at all.