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New York (HedgeCo.Net) – Saying that GM is in the “worst shape,” Senate Banking Committee Chairman Christopher Dodd told the struggling automaker that they’ve got to consider new leadership if they want to receive federal aid.  The comments prompted many to believe he was referring in fact to GM CEO Richard Wagoner, whom Dodd said “has to move on,” on CBS’s “Face the Nation.”

President-elect Barack Obama didn’t exactly reaffirm Dodd’s position, but said at a Chicago press conference that if management “doesn’t understand the urgency of the situation and is not willing to make the tough choices and adapt to these new circumstances, then they should go.”

Congress will reconvene this week to discuss the proposed $15 billion rescue plan that would hopefully salvage both General Motors and Chrysler.  Although they are closer to finalizing a plan of action for the troubled companies, they are still met with reluctance from certain individuals. 

Alabama Senator Richard Shelby, who has been outspoken about his disdain for any auto rescue plan, is supporting a filibuster that would put a halt to the legislation and instead prompt a lengthy debate about the issue.

Dodd, however, realizes it is a time-sensitive issue and focused during the interview on the fact that the auto industry could completely sink in the next few weeks if nothing is done.  “Even if people don’t like this idea, none of us want to wake up January 1st and discover we don’t have an industry to save.”  According to the Connecticut Senator, 1 out of every 10 jobs in the U.S. is either directly or indirectly related to the American auto industry.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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New York (HedgeCo.Net) – The debate on whether or not to grant the big three Detroit automakers billions in bailout funds continues as Democratic leaders set a timetable for the companies to present a “credible restructuring plan.” 

In a letter sent Friday to GM’s Rick Wagoner, Ford’s Alan Mulally and Chrysler’s Robert Nardelli, Speaker of the House Nancy Pelosi and Senate Majority Leader Harry Reid outlined what the auto executives must do to receive the rescue they are desperately seeking.

"The American people – deserve to see a plan that is accountable to taxpayers and that is viable for the long-term," the letter said.  The democratic leaders also insisted that the auto executives must be "making significant sacrifices and major changes to their way of doing business."

With the majority of media attention focusing on the fact that each of the three men flew private jets to Washington and proceeded to beg Congress for $25 billion in bailout money, “significant sacrifices” could mean perhaps flying commercial next time.      

The letter states that the companies must provide a detailed assessment of their finances, along with a request for an amount that they feel would bring them to “long-term viability.”  The December 2^nd deadline leaves plenty of time for heated debates on what seems to be the most prevalent issue in the current economic crisis. 

Some republicans, like Alabama Senator Richard Shelby, are reluctant to provide aid to what he feels is already a lost cause.  In a recent CNN interview, Shelby argued that even $25 billion would not save the automakers.  He went on to say that perhaps $50 billion or even $100 billion would not be enough.  His take is that unless these companies have “new management, new innovation and new products,” they are going to sink, no matter how much of an infusion of cash they receive.

The Democratic leaders said the companies have failed to convince Congress that they have a coherent strategy to stay afloat once any funding was granted.  The letter urges the automakers to bring to the table a long-term plan with reasonable objectives for repayment.

Should the companies receive any taxpayer-funded loans, those would receive “senior status,” meaning they would have to be paid off before any other company debt.  The Democrats are hoping that Congress will reconvene the second week in December to decide if and how there will be a rescue package for the three automakers.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
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New York (HedgeCo.Net) – Auto executives stood before Congress yesterday and requested a $25 billion rescue package, pleading that their industry was going under fast. After allocating billions to bailouts in recent months, the auto industry was met with quite a bit of reluctance from many of the same individuals who were all for the $700 billion in handouts to financial firms.

"Detroit’s basic problem is that they created a business model that doesn’t have a snowball’s chance in hell of surviving in a global economy," said Republican Senator Lindsey Graham from South Carolina.

Alabama Republican Senator Richard Shelby agreed, saying that the automakers, aka “failed models,” should just file for bankruptcy.

The hearing was held a day after Senate Democrats proposed the $25 billion in rescue loans. However, the auto industry just happens to be at the end of the line after the government handed out funds to AIG, Bear Stearns and mortgage lenders Fannie Mae and Freddie Mac.

“This is about much more than just Detroit,” Rick Wagoner, head of General Motors, said in his testimony. It’s about saving the U.S. economy from a catastrophic collapse.”

General Motors is seeking approximately $10 billion from Uncle Sam while Ford and Chrysler are asking for about $8 billion and $7 billion respectively.

"While the domestic auto industry has made mistakes in the past, the current problems have been exacerbated by one of the worst economies in nearly three decades," Alan Mulally, CEO of Ford Motor Corp. said in his testimony.

Mulally and Wagoner, along with head of Chrysler Robert Nardelli and Ron Gettelfinger, head of United Auto Workers Union were all part of the team that testified before Congress.

Gettelfinger added, "If one of these companies was to go into bankruptcy, I would almost bet it would take two of them or possibly all three."

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com

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