The Bush regime gives Detroit some relief

On Friday (12.19.2008), President Bush announced that he intends to use financial bailout money(TARP) to aid General Motors and Chrysler. The aid will take the form of short-term loans. The amount: $13.4B. These loans come with conditions (see this), which are, according to the White House fact sheet:

  • Firms must provide warrants for non-voting stock.
  • Firms must accept limits on executive compensation and eliminate perks such as corporate jets.
  • Debt owed to the government would be senior to other debts, to the extent permitted by law.
  • Firms must allow the government to examine their books and records.
  • Firms must report and the government has the power to block any large transactions (more than $100 million).
  • Firms must comply with applicable Federal fuel efficiency and emissions requirements.
  • Firms must not issue new dividends while they owe government debt.
  • Reduce unsecured debt by two-thirds via a debt for equity exchange.
  • Make one-half of Voluntary Employee Beneficiary Association (VEBA) payments in the form of stock.
  • Eliminate the jobs bank.
  • Work rules that are competitive with transplant auto manufacturers by December 31, 2009.
  • Wages that are competitive with those of transplant auto manufacturers by December 31, 2009.

Although these loans will save at least two of the Big Three, the New York Times correctly asserts that Bush's bailout only "…hands off to President-elect Barack Obama the difficult political task of ruling on their future."

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