What are Lobbists Pushing at the Conventions?September 4, 2008 - by Donny Shaw
To be certain, a lot of things. But one of the most substantial and controversial of them is a $50 billion government bailout of the big three American automakers.
>Plunging auto sales, high gas prices and election year politics could help convince Congress to approve a $50 billion loan package to embattled U.S. automakers that Detroit’s Big Three claim is key to their future success.
>The Big Three are now in the process of closing truck assembly lines and rushing to catch up with hybrid and other fuel efficient offerings from Toyota Motor and Honda Motor.
>But with GM and Ford saddled with junk bond debt ratings and privately-held Chrysler with the thinnest capital cushion of the three, Detroit is caught in a credit squeeze that will make such investment difficult if not impossible.
>Thus, the automakers have deployed what one industry official describes as a “surge” of lobbyists and executives at both the Democratic and Republican Party’s political conventions. The Big Three’s hope is that if they can win speedy passage of the loan package, they can move more quickly to retool their plants to produce more smaller cars.
Here’s the kicker:
>Industry experts say that while the savings from the lower interest rates would amount to billions of dollars for the automakers, the program may not necessarily save a member of the Big Three from eventual bankruptcy in the way that federal loan guarantees rescued Chrysler in the 1970’s.
So, what do you think? Are the Big Three like Bear Stearns, Fannie Mae and Freddie Mac – “too big to fail”?