Half A Bailout is Better Than No Bailout
Monday, December 08, 2008SUZANNE PRATT: There's a deal in the works in Washington that would help the struggling Detroit auto makers stay in business through March. Late today, congressional Democrats sent the White House a temporary auto rescue plan. It calls for $15 billion in emergency short-term loans to GM, Ford and Chrysler, with a government appointed overseer. That car czar would have the power to require repayment if the auto makers don't come up with viable restructuring plans. As Darren Gersh reports, Congress could attach additional demands to the measure next spring.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Auto makers had wanted more than $30 billion in government loans, but Democratic congressional leaders apparently decided half a bailout was all that should be done now. House Speaker Nancy Pelosi said Detroit auto makers would get enough money to get to next spring, but after that, it was time to prove the industry was on what she called a path to viability.
REP. NANCY PELOSI, HOUSE SPEAKER: But if they don't meet the conditions of the structuring and the rest, there's not going to be an endless flow of money to this industry to continue left to their own devices.
GERSH: If she's not satisfied with the plans the auto industry comes up next spring, Pelosi says Congress will press for new corporate leadership. Some members of Congress have already called on GM CEO Rick Wagoner to step down. Yale School of Management Professor Jeffrey Sonnenfeld studies CEO leadership and argues Wagoner has lost his credibility.
JEFFREY SONNENFELD, SR. ASSOC. DEAN, YALE SCHOOL OF MANAGEMENT: We shouldn't be giving him extra time just because he might be an especially nice guy with a great presentation. He's not been fixing this problem and he's been part of senior leadership for almost 20 years.
GERSH: Wagoner's defenders say it is hypocritical for politicians, who haven't produced a green energy policy to punish GM for not making green enough cars. Warren Brown, automotive columnist for the "Washington Post," says Wagoner is making the right moves.
WARREN BROWN, AUTOMOTIVE COLUMNIST, WASHINGTON POST: Rick Wagoner was, before Washington was pushing him to do it, Rick Wagoner was the person who stood up and said, you know, we have to move away from oil. We have to move away from the huge amount of fuel we are using.
GERSH: For now though, Wagoner seems to have won over critics with pledges to build vehicles like the all-electric Chevy Volt. Environmentalist Deron Lovaas says as long as GM doesn't fight higher fuel efficiency standards, he won't fight for a management change.
DERON LOVAAS, TRANSPORTATION POLICY DIRECTOR, NRDC: The fact that the business plan looks different seems to indicate that maybe GM has slipped out of its years long trance, including the leadership and been shocked into awakenness.
GERSH: Negotiations with the White House are still under way. House Speaker Nancy Pelosi calls the deal a barber shop where everyone takes a haircut. So for now it looks like GM's CEO Rick Wagoner will not be joining the two million Americans who have lost their jobs over the last year. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.
