Q Why don't we help the automakers?Actually, the “hang-up,” as noted in this story, is what Fratto referred to above more than anything else…
MR. FRATTO: We are helping the automakers -- or at least we have a plan to help the automakers. We had a bipartisan agreement on the floor of Congress -- well, actually, it never made it to the floor because the Democratic leadership decided not to bring it to the floor. But we had a bipartisan agreement that we believe would get bipartisan support. It was for $25 billion in the loan program that would have freed up that money in a way that would support the automakers in their efforts -- to help to support them as they become viable firms, because these are important parts of our manufacturing base. We want to see the automakers succeed.
There seems to be some misconception out there that we don't want to help the automakers. We do want to help the automakers. We had a bipartisan agreement to do just that, and we believe that's where those funds should come from. And by the way, the news overnight where -- this was a relatively unexpected effort by Treasury and the Fed. If you had said two weeks ago that they were going to have to take this action for Citibank, I think that would have seemed unlikely. This is a very dynamic situation we're dealing with, and the financial system is still fragile.
But that also speaks to the need to preserve the funds in the TARP for their intended purpose. We don't need to be taking funds out of the TARP program for other purposes -- and with respect to the automakers, especially when we have a $25 billion loan program that was specifically set up for their use.
Q Well, what's the hang-up? Is it because the money is coming out of the --
MR. FRATTO: That's a question for Congress, Helen. The money is there; we tried to work on both sides of the aisle to design it in a way that the automakers could access it and to help them move forward and be viable. So I would put that question to the Democratic leadership of the Congress.
…the new rescue plan appeared stalled on Capitol Hill, opposed by the Bush administration and Republicans in Congress who don't want to dip into the Treasury Department's $700 billion financial bailout program to come up with the $25 billion in loans (for the automakers).Yes, I’ll note yet again that it’s very hard to feel sympathy for Wagoner, Nardelli and Alan Mulally of Ford, but as Dem Michigan Senator Debbie Stabenow said to Rachel Maddow last Friday, I don’t see our financial wizards who were allowed to create this mess to begin with (with no government oversight, of course) getting the same treatment as the automakers, especially since all the Big Three are asking for is $25 million from TARP as a bridge so they can do the retooling that they should have done years ago (I got into some of this earlier from here).
"Our industry ... needs a bridge to span the financial chasm that has opened up before us," General Motors Corp. CEO Rick Wagoner told the Senate Banking Committee. He blamed the industry's predicament not on failures by management but on the deepening global financial crisis.
And Robert Nardelli, CEO of Chrysler LLC, told the panel the bailout would be "the least costly alternative" when compared with damage from bankruptcy.
And as far as this business of funding for the automakers being contingent on what amounts to a loan application, that doesn’t make any sense to me either given the immediate need (why do I get the feeling that this is just a sop to try and placate conservatives who wouldn’t bat an eye if the automakers sank altogether?). Yes, have the Big Three explain what they’re going to do with the “bridge” loan and the additional $25 billion for retooling (and by the way, the funding for the financial services companies should be paid out in installments on the condition that strict accounting is performed and reporting provided concerning the existing funds as well, or else they get “cut off at the knees”). But can we get them the money first so they don’t go under while we’re still arguing the matter?
The net effect of this “loan application” provision for the automakers, as far as I’m concerned, is to create what Senate Minority Leader Mitch “Mr. Elaine Chao” McConnell called here a "bizarre and confusing" spectacle (yep, it’s pretty sad when I find myself agreeing with the leader of the “Roadblock Republicans” and last year’s “Dregs Of The Year” winner – and by the way, look for the ’08 nominees to start “rolling out” in a couple of weeks – but there you are).
Returning to the press briefing by Tony Fratto for a minute, though, I’d like to note the following (stumbling onto what I thought was an interesting point)…
Q Tony, some are concerned, particularly on the Hill, that this Citigroup bailout is smacking of AIG all over again. Some are asking for Citigroup to pull their name -- opt out of naming for the New York Mets Stadium -- $400 million and you just gave them $25 billion. I mean, people are saying that smacks of it, particularly Congressman Elijah Cummings from Maryland, would say -- do you think they should opt out of the naming rights contract?Hey, if we’re going to hold up funding for the automakers, then the least we can do is name some stadiums after them (why do the banks, telecoms and insurance firms always have to have the fun?).
MR. FRATTO: That's -- I'll be honest, this is the first time I heard of that. I didn't know that they were involved in that. I would presume that if there's a contract then that's a legal question as to what they can do. But I'll leave that for Citibank for now, and Treasury, and the regular -- their regulators, because you're telling me something I'm not aware of.
Update 11/27/08: I just noticed that the Detroit Lions play in a stadium with the Ford logo on the roof - my bad; serves me right for making a sports comment I guess.