Senate Says No, The White House Says How Much?
The White House gave troubled Detroit automakers public reassurances that short-term government help was in the works. As a key senator suggested, the aid package could reach $15 billion for two companies. President George W. Bush said the bankruptcy of a domestic car company would undermine the nation's economy as it grapples with a financial meltdown. General Motors Corp. and Chrysler LLC have said they could run out of cash within weeks without support from the government. In Detroit, Sen. Carl Levin, D-Mich., said he expects GM to get $8 billion and Chrysler $7 billion under the Bush administration's plan. They said the Treasury Secretary likely would be named as a "Car Czar" to oversee restructuring of the companies. Bush wouldn't give a precise timetable but said, "This will not be a long process because of the economic fragility of the autos."
The Bush administration, following the defeat of a $14 billion bailout package in the Senate last week, is considering several options. They include using money from the $700 billion financial bailout fund to provide loans to the carmakers or using money from the fund as collateral for emergency loans the automakers could get from the Federal Reserve. Bush reiterated Monday that tapping the financial bailout fund remains an option. The White House is keeping President-elect Barack Obama and his advisers informed of the discussions. If administration officials choose not to provide the money now, the Obama team could wait for the new Congress, which will have stronger Democratic majorities. However, the delay could risk bankruptcy filings by GM and Chrysler.
U.S. Defense Contractor and Chinese Company Try to Buy Hummer?
Chinese carmaker, Changfeng, and U.S. defense contractor, AM General, are looking to team up for a bid to buy Hummer from GM. Zhengchu Chen, General Manager of China's Chengfeng Motors, told reporters the company was in talks with AM General, the original manufacturer of the Hummer brand and a major provider of vehicles for the U.S. military over acquiring the brand. It is no secret Hummer is for sale, though we'd heard Chinese automaker, Chengfeng was no longer interested. Apparently, Chengfeng didn't want to do it alone and the combination of Chinese capital with AM General production capacity is a win-win for the two companies.
The idea of a Chinese company buying the American brand, Hummer is likely to ruffle a nationalistic feather or two, but Chinese currency buying up American property is something that's been going on for some time. The idea of the Chinese hooking up with the same company better known for producing military Humvees and trucks may drive some nuts. Of course, the Hummer is no longer considered the military vehicle of the future and AM General already signed a contract to build boxy Taxis, an area the Chinese already own. Still, this is something to think about when people claim it is better for the U.S. auto industry to fail. What are we going to do when we go to war with China? Ask them to build us our tanks? We imagine John Milius is probably freaking out by now.
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