No Runny Eggs

With that, he bowed his head and gave up his spirit.   John 19:30

And so it is with George Bush.  

Several sources are reporting that President Bush has decided upon a bailout package for the auto industry.   The package is said to be as much as $17.4B pending Congress’ approval of the second tranche of TARP funds.

According to the Politico, the loan provisions look very much like the package defeated in Congress last week but, includes the “Corker amendments,” although as part of the “non binding” parts of the loan.   As Non binding, the Corker amendment terms will be suggested targets but not absolute requirements.  

I’m on record as supporting the government providing debtor in possession financing to support an “orderly” bankruptcy.   It sounded recently as if Bush was headed down that path.   By having an “orderly bankruptcy,” the companies would get the fund they need to operate while they were put into bankruptcy to do the gloves off negotiation required to get all parties to an agreement that might allow for survival of at least one of the auto makers.

With the announced plan, Bush has let the UAW off the hook in providing any meaningful assistance to the health of the industry.   Rather than make requirements of the union issues, he included them as “targets.”   These “targets” will get thrown by the wayside the minute that Democrats are faced with the choice of a hostile union or turning the other cheek and making the auto industry nothing more than a vassal of the government.

Revisions/extensions (9:38 am 12/19/2008 – steveegg) – Here’s the video of Bush giving up the ghost (from MSNBC via Allahpundit)

That under-the-bus moment for the Corker amendment suggestion will come at 4:05 pm EST 1/20/2009.

Only Nixon could go to Red China, and only Bush could put the final nail in the coffin of free markets (tombstone shamelessly borrowed from Michelle Malkin)…

R&E part 2 (4:02 pm 12/19/2008 – steveegg) – Lawhawk found the terms of the loans for both Chrysler and GM. The terms of the 3-year loans are as bad as I feared:

– All of the anti-management requirements in the House bill are there.
– The anti-UAW provisions are but “targets” that the Obama administration will judge. Any takers on the equally-vague “fuel efficiency”, “advanced technology vehicles” and “competitive product mix” targets being much more vigorously enforced for the benefit of the Gorebal “Warming” acolytes than the calls for the end of the Jobs Bank or reduction in salaries/benefits to the levels paid by the Japanese Big Three?
– The interest is based on the 3-month LIBOR plus 300 basis points (or a minimum of 5.00%), which changes to the 3-month LIBOR plus 800 basis points (or a minimum of 10.00%) if the loan changes to a Debtor-In-Possession loan. Anybody else find it curious that the Treasury isn’t using the Fed rates?
-The Treasury Department will be, in lieu of taking an ownership stake in Chrysler, tacking on an additional 6.67% in its loans to Chrysler, or $266.8 million (for a grand total of $4,266,800,000).
– The Treasury Department (read, taxpayers) will be taking 20% of the loan GM’s market capitalization (as the “warrant limit” will hit first) in the form of perpetual-term warrants for common shares the Treasury promises not to exercise its right to vote except in cases of a “termination event” or bankruptcy. At last check, the market capitialization of GM was $2.74 billion, which would make that about $548 million.
– Since that “warrant limit” is lower than what the Treasury wants for either the $9.4 billion that is guaranteed to go out the door before Bush leaves or the $13.4 billion that is, in part, held hostage by Congress, the Treasury will be taking an additional amount in loans in a method similar to Chrysler.
– In order for GM to lose the warrants after it pays back the loans, they have to buy back the warrants at the market price. In short, we’re going to be owning GM for a long time.