Big Three Bailout: We've Almost Got a BillDecember 7, 2008 - by Donny Shaw
UPDATE: We’ve got a bill. Click here to download it in pdf.
The full Senate is returning today to begin work on a pared-down, $15 billion auto bailout bill. Here’s what we know at this point about what the legislation will look like (via NYT):
>Congressional Democrats were drafting legislation Sunday for tight government control of the crippled American auto industry, including the possible creation of an oversight board made up of five cabinet secretaries and the head of the Environmental Protection Agency and led by an independent chairman or “car czar.”
>While the form of oversight was still to be negotiated by Congressional Democrats and the White House, the talks made clear the extent to which the auto companies would have to submit to substantial government supervision in order to receive a taxpayer-financed bailout.
>Whatever oversight entity is created, it would direct the drastic reorganization plans that the auto companies have said they were willing to undertake in exchange for billions of dollars in short-term government loans to keep them in business, a senior Congressional aide said. A main factor complicating the deliberations was the imminent transition between the Bush and Obama administrations.
>The final legislation is also expected to impose stringent taxpayer protections, including stock warrants that would give the government an equity stake in the three companies, new limits on executive pay and a ban on stock dividends while the loans are outstanding. One proposal would require the auto companies to seek government approval for any business transaction of $25 million or more.
And Bloomberg News provides details of the oversight structure the Bush White House is pushing for:
>A draft proposal from the White House would create a “financial viability advisor” within the U.S. Commerce Department that would be responsible for helping automakers achieve a plan for long-term financial success.
>The adviser could provide financing to an automaker to keep operating for no more than three and a half months. The financing would be supplied only if the adviser concludes the automaker will otherwise go bankrupt during the period of negotiating the plan and if stakeholders are negotiating in good faith.
As for the bailout’s chances of passing in the Senate, as Sen. Carl Levin (D-MI) said on Sunday, that’s a “much more complicated question.”
Senator Richard Shelby (R-AL) is already talking about a filibuster, and there is some indication among Republicans that there’s going to be more opposition to bailing out the car companies with $15 billion than there was to bailing out Wall Street with $700 billion. For example, Senator Bob Corker (R-TN), who voted in favor of the Wall Street bailout, has been a strong oppositional voice to the plan during committee hearings in the past month. And yesterday he released a statement expressing his disappointment with the auto bailout plan.
The Wall Street bailout passed with 74 votes in favor, so passage of the auto bailout plan is contingent on whether there are 14 other Republicans that voted for the Wall Street bailout who willing to take the same position as Corker.