CQ Politics has just sent out an update about next week’s post-election session of Congress, “Senate Plans Auto Industry Bailout Debate“:
Senate Democratic leaders plan Monday to take up legislation providing $25 billion in assistance to the struggling domestic auto industry, a spokeswoman said Friday.
The debate likely will lead to a vote on the legislation Wednesday. Details of the bill — and the procedural strategy — remained unclear. Democrats have proposed carving out $25 billion for the automakers from the $700 billion financial industry bailout cleared last month, though that idea has run into resistance from the White House and congressional Republicans.
Banking Committee Chairman Christopher J. Dodd , D-Conn., said it was unlikely there would be enough votes to approve the measure in the face of GOP opposition.
And the House reconvenes Wednesday.
The New York Times also looked ahead in a thorough, multisourced article, “Chances Dwindle on Bailout Plan for Automakers.”
One of the more mystifying, even reckless lines of argument goes something like, “Just let the auto makers go bankrupt. It’s worked for the airlines. Reorganize, streamline, get rid of the union contracts. No sweat.”
The auto industry is at the heart of the country’s manufacturing sector, and bankruptcy would reverberate throughout the economy (not to mention the impact on stockholders), and we’re glad to see pushback against the pro-bankruptcy insouciance. From Bloomberg, “Wilbur Ross Says GM Bankruptcy Filing Would Be a `Total Mess’ “:
Ross, dubbed the “King of Bankruptcy” by Fortune magazine in 1998, said a restructuring bid by one of the three top U.S. automakers would topple its peers and drive weakened suppliers out of business because the credit crunch dried up financing.
“If we were in a different overall economic environment, one of them going down wouldn’t necessarily kill” the industry, he said. A weakened economy and frozen debt markets make an automaker bankruptcy impossible, with a Chapter 11 filing for reorganization resulting in liquidation instead, Ross said.
Failures by automakers and related businesses would lead to a drain on government spending for unemployment benefits, health care and pension recoveries, said Ross, whose WL Ross & Co. is based in New York. GM has said bankruptcy isn’t an option.
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