Just when it looked like the Detroit bailout plan penned by the White House and congressional Democrats was gaining steam – it was slated to be voted on today – it has been thrown off track by the House Republicans.
The House Republicans have submitted their own plan – dubbed the American Automotive Reorganization and Recovery Plan – just hours before Congress was scheduled to vote on the recently submitted plan.
Whereas the current plan calls for taxpayers’ money to fund the automakers’ turnaround plans, the Republicans’ bill seeks to encourage private investments in the Big Three. The new bill essentially creates an insurance program that would guarantee 50 percent of all investments put into the Detroit Three, with part of that being funded by the automakers themselves and the rest from the federal government.
The idea behind the plan is to make it more attractive for private investors to loan money to the Detroit Three, but with bankruptcy a very real out, we sincerely doubt anyone would take that offer, despite the 50 percent guarantee.
From the sound of the new bill, Capitol Hill is fairly fractured over a Detroit bailout, meaning General Motors and Chrysler might already have one foot in the grave.
