Thursday, December 11, 2008

Why Don't Republican Senators Support the Detroit Bailout

Some still believe in the free enterprise system.

The idea of a government “Car Czar” is repugnant.

The bailout is fundamentally unfair to the auto companies who do not need it.

Some represent states (mostly Southern) with manufacturing plants of imported cars.

Some do not believe the current bill goes far enough in ensuring a financial turnaround for Detroit. The Chrysler bailout of almost three decades ago required substantial sacrifices by equity holders and employees.

Only bankruptcy will provide a comprehensive solution.

This loan, a bridge loan into the new Obama Administration, is but the first into what appears to be a bottomless pit, also known as a black hole.

President Bush is a lame duck with 40 days left in office.

The government as creditor will jump in line ahead of all other creditors, including banks and secured creditors. This provision may be unconstitutional.

They want Cerberus, the hedge fund owner of 80.1% of Chrysler, to invest more capital into Chrysler. Cerberus also owns 51% of GMAC and is now threatening bankruptcy of GMAC.

The current plan was worked out between President Bush and the Democrats.

Some irrelevant goodies, “earmarks”, were included in the bill.

They felt a backlash after the earlier $700 billion Wall Street bailout.

It’s payback time. The United Auto Workers has spent $10 million in recent years in trying to elect Democratic Senators. Several of the retiring, voluntary or involuntary, Republican Senators still have a few weeks left in their term.

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