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• On December 19, 2008, the U.S. government agreed to give Chrysler and General Motors an emergency loan to help the financially strapped companies stave off bankruptcy. The plan, announced by President Bush, requires the companies to undergo aggressive restructuring.Bloomberg.com: GM and Chrysler Will Get $13.4 Billion in U.S. Loans The funds were taken from the $700 billion Troubled Asset Relief Program (TARP). Since the passing of the bailout package, both Chrysler and GM have asked the government for billions more in aid.Los Angeles Times: GM, Chrysler seek billions more in federal loans

  In February 2009, a senior government official in the administration of President Barack Obama said Obama will create a task force to oversee the restructuring of the industry instead of appointing one "car czar" to oversee it.The Washington Post: White House Won't Appoint a 'Car Czar' (February 16, 2009)

• Fast Facts

  1. American automakers Ford, GM, and Chrysler known collectively as the "Big 3"
  2. Federal government provided $17.4 billion in federal loans for Chrysler and GM in 2008The Washington Post: White House Won't Appoint a 'Car Czar' (February 16, 2009)
  3. Ford has refused bailout moneyWBAL: Ford Execs: We Don't Need Bailout Cash (December 10, 2008)
  4. Final vote was for much less than the $34 billion originally requested by the automakersReuters: White House, Democrats reach deal on $15 billion auto aid (December 5, 2008)
  5. The original bailout plan did not pass in the U.S. Senate
  6. George W. Bush then announced that he would make funds from the TARP available for automakers
  7. General Motors warned on December 3, 2008, that without a bailout, the company may not see 2009CBS News: GM Warns It Won't See New Year Without Aid (December 3, 2008)
  8. Representatives from GM, Ford and Chrysler first met with lawmakers during the week of November 17, 2008
  9. Executives were criticized for traveling to Washington in multi-million-dollar private jetsThe Huffington Post: Dems delay auto bailout vote, seek plan from Big 3 (November 20, 2008)
  10. Congress has already pledged $25 billion in funds to retool and modernize aging factoriesIndianapolis Star: Automakers may seek government bailout (November 8, 2008)
  11. Barack Obama discussed the issue with President Bush during their November 10 White House meetingThe New York Times: Obama Asks Bush to Provide Help for Automakers (November 11, 2008)

• Private Jet Controversy

  The use of private jets by the CEOs of the major American automotive companies as they headed to Washington to ask Congress for bailout money has drawn heavy criticism. Democratic Representative Gary Ackerman compared it to showing up "at the soup kitchen in a high hat and tuxedo," and asked the CEOs if they could have jet-pooled to Washington as a cost-saving measure.Reuters: Auto execs' private flights to Washington draw ire (November 19, 2008) Republican Peter Roskam, in response, queried the executives as to whether or not they'd be willing to work for salaries of $1 a year until the companies were again financially stable. Washington Post columnist Dana Milbank noted that the executives could have taken any one of 24 non-stop flights from Detroit to Washington DC.WashingtonPost.com: Flying from Detroit on Corporate Jets, Auto Executives Ask Washington for Handouts (November 19, 2008)

• Congressional Demands and Accountability

  After lawmakers first met with representatives from the "Big 3," House speaker Nancy Pelosi, Senate majority leader Harry Reid and other high-ranking Democrats held a press conference on November 20, 2008, to discuss the possibility of a bailout. Reid and Pelosi asked the company executives to produce a viable and reasonable plan by December 2, detailing how the bailout money would be spent. During the press conference, Pelosi said, "Until they show us the plan, we cannot show them the money."The Huffington Post: Dems delay auto bailout vote, seek plan from Big 3 (November 20, 2008)

  The day before the tentative deal was struck, the automakers submitted their plans to Congress detailing how they would spend proposed bailout funds provided by the U.S. government. All of the companies claim that they will not be able to survive without some form of federal bailout.Indianapolis Star: Automakers may seek government bailout (November 8, 2008) Congress has already committed $25 billion for retooling plants in Detroit, but the automakers are seeking billions more in bridge loans to keep their companies from filing for bankruptcy.Indianapolis Star: Automakers may seek government bailout (November 8, 2008)

• Plans for the Bailout

  The bailout plan was approved by the U.S. House of Representatives on the evening of December 10.Washington Post: Auto Bailout Clears House but Faces Hurdles in Senate (December 11, 2008) On December 11, 2008, members of the GOP filibustered, and the bill to bail out automakers failed. The Senate voted, but Democrats could only muster 52 votes, eight short of that required to overcome the filibuster.Wall Street Journal: White House Shifts as Auto Rescue Stalls (December 12, 2008)

  On December 19, 2008 the Bush administration announced it would make funds from the $700 billion Wall Street bailout fund, specifically the Troubled Assets Relief Program (TARP), available for emergency aid for the automakers.Bloomberg.com: U.S. Treasury Ready to Prevent Failure of Automakers (December 12, 2008)

• Status of the Car Companies

  Automobile manufacturers internationally are facing bleak sales outlooks and stock drops. Sales for Honda, Toyota and Nissan were all down in 2008.Indianapolis Star: Automakers may seek government bailout (November 8, 2008) However, the "Big 3", GM, Ford and Chrysler, are feeling the worst of the downturn. GM reported a 3rd-quarter loss of $2.5 billion in November 2008, and announced it will cut an additional 10% of its workforce in addition to the 20% already planned.CNN Money: GM: Almost out of cash (November 7, 2008) Indianapolis Star: Automakers may seek government bailout (November 8, 2008) GM is believed to be the worst off of the Big 3.Reuters: SCENARIOS: What to expect from U.S. auto bailout (December 9, 2008)

  In 2008, sales of General Motors' vehicles fell nearly 11%. Toyota reported 2008 sales of 8.97 million—giving the Japanese automaker the title of world's largest automaker for the first time. GM held the title for nearly 80 years.CNNMoney.com: GM loses sales title to Toyota (January 21, 2009)

  On February 10, 2009, GM announced plans to cut 10,000 salaried jobs worldwide as part of a massive restructuring plan in exchange for for bailout funds.CNNMoney.com: GM cutting 10,000 jobs (February 10, 2009)

  Chrysler announced that it would close all of its production plants for at least a month starting December 19, 2008, due to a decreased demand for their vehicles.CNNMoney: GM, Chrysler Face Immediate Cash Crisis As Senate Vote Fails (December 12, 2008)

  On January 5, 2009, Chrysler reported that their overall sales in the United States plunged 53% in the month prior. The sales of Chrysler trucks went down 51% and the sales of cars dropped 59%.Associated Press: Chrysler Sales Plummet 53 Percent (January 5, 2009)

  Ford executives have refused bailout money, and will instead rely on a $23.5 billion government credit the company received in 2006 to stave off bankruptcy.WBAL: Ford Execs: We Don't Need Bailout Cash (December 10, 2008)

• No Car Czar

  "Car czar" is the term being used to describe the plans for a congressional appointee that would oversee automakers who have benefited from the automaker bailout and assure that the government money is spent appropriately. President Barack Obama will not appoint a car czar, according to a senior official in his administration. Instead, Obama is creating a task force to oversee the restructuring of the industry. The task force will be lead by Secretary of the Treasury Timothy Geithner. The Bush Administration supported the establishment of a "car czar" position.The Washington Post: White House Won't Appoint a 'Car Czar' (February 16, 2009)The Washington Post: White House Won't Appoint a 'Car Czar' (February 16, 2009)

• Quotes

  "As for our auto industry, everyone recognizes that years of bad decision-making and a global recession have pushed our automakers to the brink. We should not, and will not, protect them from their own bad practices. But we are committed to the goal of a re-tooled, re-imagined auto industry that can compete and win. Millions of jobs depend on it. Scores of communities depend on it. And I believe the nation that invented the automobile cannot walk away from it."The Huffington Post: Obama Speech Tonight — Barack Obama, State of the Union speech, February 24, 2009

• Related Pages on Mahalo

  Eminem Jimmy Kimmel | GM Ford Losses | Ford | General Motors | Chrysler | Rick Wagoner | 2008 Financial Crisis | 2008 Recession | Consumer Confidence | Credit Crisis | 2008 Recession | Mortgage Bailout Plan | Gas Prices | [[GM $39 Billion Loss]] | Toyota | Renault | Ron Gettelfinger | Car Czar | Bailout | TARP | Neil Barofsky

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