GM, Ford, Chrysler Bail-Out Fails Photo:
Tim O'Brien | Dec, 12 2008 | 0 Comments

With hundreds of thousands of jobs at stake both in vehicle manufacture and across the sector, and thousands of smaller component suppliers reliant on the industry now facing an uncertain future, be prepared for a tumble on Wall Street tomorrow.

The House of Representatives passed the Bill on Wednesday, with the backing of the Bush administration, but it has now foundered in the Senate. According to reports, negotiations to get the Bill through the House collapsed over Republican demands that the United Auto Workers union agree to wage cuts - which, it would seem, they were not prepared to do.

These will be nervous days for GM, Ford and Chrysler. Unless the Bill can be rescued, the prospects of a collapse of one, or all three giant automakers, is very real. Some reports have GM just weeks away from falling; Chrysler likewise.

So what's behind this? Many Republicans, and some Democrats, do not feel that it is the role of Government and tax-payers to bail out poorly run companies - no matter how big they are. Many have argued strenuously against the trillions that have been poured into negligent companies, banks and insurers to date. Some feel that only bankruptcy will allow the 'clear-out' that is needed in these companies, and, in the case of the automakers, allow them to get out from under the weight of their retirement and pension plan obligations.

rick_wagoner_gmOthers want more concessions from the car makers, including a sweep-out of top management. In this, GM's Rick Wagoner has a target on him as big as a superdome. Many are also of the view that the bail-out Bill does not impose strict enough conditions on the car makers in return for the loans.

Many ordinary Americans are angry that these once-great icon companies have so spectacularly failed them by building too many overblown, wasteful and foolish cars that too few were prepared to buy.

The Democrat majority, and, most certainly President-elect Obama who supported the Bill, are very disappointed with its failure to pass the Senate.

"We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable," White House spokesman Tony Fratto said.

What happens tomorrow is anyone's guess.

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