Another wall stops bailout money from reaching GM and Chrysler's coffers. Now it seems only President George Bush can get them out of their misery.
The US Senate has rejected a compromise deal that would see Detroit's Big Three get $14 billion in bailout money.
GM and Chrysler desperately need bailout funds to make it past the New Year, or at least until President-elect Barack Obama comes into office under the hopes his administration would save them. GM and Chrysler's survival, and to a certain extent Ford's, doesn't just affect the US but the whole world where these companies trade, have factories, dealers, workers and other peripheral suppliers.
Senate Majority Leader Harry Reid said of the collapse in talks: "I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight. This is going to be a very bad Christmas for many people."
The key issue for the bailout failure was the United Auto Workers (UAW) to meet Republican senators demands of benefit rollbacks on par with those of foreign manufacturers' factories by 2009. The UAW said it was willing to do this when the current contracts expire in the late summer of 2011 but not sooner. Another idea, touted by Democrats but rejected by Republicans, involved UAW to agree to accepting company stock in exchange for US$10 billion owed in retiree health care.
Now it looks as though only President George Bush can save the deal by accessing what's left of the $700 billion financial bailout fund, half of which is being made available. Previously Bush did not consider this option, but a White House aide says he is now looking at all the available options.
Minority Leader Mitch McConnell commented: "We simply cannot ask the American taxpayer to subsidize failure... Even if we grant that these companies would fail without taxpayer help, we would still have to ask ourselves whether the proposal before us achieves the goal that everyone claims to embrace -- namely, the long-term viability of ailing car companies -- and, in my view, it does not."