Although there is still no official word from Capitol Hill, the White House and congressional Democrats reportedly came to an agreement late last night on the $15 billion bailout plan for the Big Three. However, the deal is far from finalized, with plenty of wrinkles still to be ironed out.
According to Automotive News, the Bush administration and congressional Democrats have reached an agreement in principle, although the measure could still be stopped by Republicans in the Senate.
The tentative agreement includes the naming of a ‘car czar’ – a presidentially selected trustee to oversee the automakers’ operations – and making the government the biggest shareholder of the Big Three.
The car czar would not only be responsible for overseeing the Big Three’s restructuring efforts, but would have the power to force any of the three companies into bankruptcy if turnaround plans were not seen as effective.
However, some Republicans will likely want more out of the bailout agreement. Most Republicans want more than the car czar’s power to force bankruptcy, and are looking for some kind of option for bankruptcy that would keep all parties involved – from management to labor – attentive to the government’s requests for concessions.
In addition, Chrysler ’s private status is making things tricky. Senate Republicans want the power to hold Cerberus – Chrysler’s parent company — responsible for the loans in the event that Chrysler fails and defaults on the loans.
It sounds like progress is definitely being made in Washington, but with so many more details to be worked out, it makes you wonder if things will be sorted out in time for General Motors and Chrysler to avoid bankruptcy.
