December 4th, 2008
10:30 AM ET
13 years ago

Big 3 CEOs return to plead for up to $34 billion from Congress

[cnn-photo-caption image= http://i2.cdn.turner.com/cnn/2008/images/12/04/art.cars.gi.jpg caption="As sales plunge, the Big Three are back to plead for a bailout."](CNNMoney.com) - The CEOs of the leading automakers were back before Congress Thursday, arguing for a larger bailout than they asked for just two weeks ago, and hoping to undo the damage they did to their case at the earlier hearings.

The three automakers are now asking for up to $34 billion in federal loans, up from their earlier request for $25 billion in assistance. Two of them, General Motors and Chrysler LLC, are warning that without immediate help, they could run out of the money they need to operate before the end of the year.

This time GM CEO Rick Wagoner, Ford Motor CEO Alan Mulally and Chrysler CEO Robert Nardelli drove fuel-efficient hybrids to Washington, rather than flying in on corporate jets as they did two weeks ago.

Ford and GM have since announced they will sell their jets. And all three CEOs have agreed to cut their pay to $1 a year if they get the federal help they are seeking.

After presenting plans to Congress Tuesday that detailed how they would use loans to return to profitability, each company warned of tremendous damage to the economy if they are forced to file for bankruptcy because of lack of help.

In prepared testimony Thursday, Mulally quoted an estimate from Goldman Sachs that said the impact to the economy from failures could be up to $1 trillion.

But the Big Three face an uphill battle to get loans approved by a skeptical Congress. Even the Democratic leaders of the House and Senate who are in favor of help for the automakers have refused to commit to calling the outgoing members of Congress back next week to vote on an auto bailout.

Congressional leaders are concerned that public opinion has turned strongly against help for the automakers. A CNN/Opinion Research Corp. poll of nearly 1,100 Americans conducted earlier this week found 61 percent oppose a bailout while only 36 percent support it. Even in the Midwest, home to most of the automakers' remaining plants, 53 percent of those polled said they oppose federal help.

That was a sharp reversal from polls taken before the CEOs last trip to Capitol Hill. A poll November 11 and 12 conducted by Peter D. Hart Research Associates found 55 percent supported federal assistance for automakers at that time, and only 30 percent believed they should not get federal help.


Filed under: Uncategorized
soundoff (183 Responses)
  1. FreeNLovIt

    It's not the auto industry's fault. When W came to power, I heard that the oil companies and other men of importance, killed off initiatives to help build great cars. Had Gore been our Prez, we wouldnt be in this mess. We'll be like LIGHT years ahead of all our competitions. Men and women, please choose your leader using wisdom not emotions.

    December 4, 2008 11:32 am at 11:32 am |
  2. Barbara in NC

    The $1/year is deceptive. They'll take stock options and other perks that will probably hit the stock-holders and taxpayers a lot more in the long run. Greed is rampant in the Auto Industry. Has been for a long time.

    December 4, 2008 11:33 am at 11:33 am |
  3. Viet Vet

    When a CEO makes 2 Million a year in salary but has 21 million in bonuses I don't think so. I could kive very, very well on that for the rest of my life, my kids could live on that for the rest of their lives and on and on and on. the interest on 21 millions @ 3% interest is $630K a year!!!!
    I think I could live on that. How 'bout you?

    December 4, 2008 11:37 am at 11:37 am |
  4. alreadytiredofit

    All of GM's stock combined is worth about 3 billion. They're asking for 17 billion. This doesn't add up. The government should buy the stock, which is much cheaper and give it to the workers who in turn will call a stockholder meeting and fire the current management. Current car manufacturers should be trying to partner with new technology companies like the one that is making the Tesla. If a void is created, something will come in to fill it. The forest has to burn for regrowth – the market has decided.

    December 4, 2008 11:37 am at 11:37 am |
  5. kenny

    It's sad that we have to make this decision but let's not get brain dead and make a decision based on emotions. I can say that I don't want to bail out the auto industry because it's not fair but there's no numbers or stats behind that statement. This is the real world and every decision that we make will have huge consequences. All these bailouts are unfair but no one is asking if these bailouts are necessary. I know everyone wants to be vengeful and make the execs suffer but these are real business decisions about America's future. Emotions should be put aside.

    December 4, 2008 11:37 am at 11:37 am |
  6. Sheila43302

    I do not understand why the financial markets who produce nothing that adds to the GDP nor employ few, if any, of the inhabitants from Main Street can get $700B without explaining rhemselves and the auto industry has it's feet put to the fire for $34B. Granted the auto industry is responsible for the predicament they are in at this time. However, I think they will begin to clean up their act now that the attention of the American people is focused on them Take the $34B out of the $700B and let's get moving!

    December 4, 2008 11:38 am at 11:38 am |
  7. souza

    This money will only pay current bills such as Payroll, Part companies etc. They do not have any products that are ready for production, such as a electric car. Even if they had products the past history shows people do not view their products as reliable and the consumer would be very skeptical to even purchase them.
    The money would be better suited to small companies that have already developed the electric car and build production facilities such as Tesla Motor Company.

    December 4, 2008 11:39 am at 11:39 am |
  8. well-read

    The automakers certainly don't deserve a bailout, but (unfortunately) the country needs the many many jobs they provide. They should get a bailout with major modifications: CEOs max pay at 400,000; higher fuel standards every five years, get tax hike for every job they outsource, tax cut for every job they create

    December 4, 2008 11:40 am at 11:40 am |
  9. Karon

    WHY is there a different standard to the greedy Wall Street bunch who still throw $460,000 weekends and promise their CEOs their bonus won't be as good but they will get a bonus?

    The CEOs of the Big Three are willing to forgo salary just to get their companies back on track! Has any of the banks or wall street firms (AIG particularly) offered the same??? NO!

    Besides, the Big Three actually offer tangible products that we can see will sell (with alittle retooling). The ripple effect of the Big 3 falling will be devisating to the economy – there are thousands of little companies that supply the Big 3 and they will fall also! We CAN NOT lay off another 5 MILLION people! It will make the US a third country – poor!

    December 4, 2008 11:41 am at 11:41 am |
  10. the kid

    Why do all the major dealerships have a $500,0000 distributor show room to show off their cars, also why do these companies have so many people working in the showrooms where they have five [ 5 ]
    people to take you money for the puirchase of the car the same work could be done with two [ 2 ] people. folks this helps add to the price of the car by several thousand dollars.

    let the automobile industry go broke. we cannot bail out everybody.

    the government can sent me a check for two hundred thousand dollars which would make me set very well for a long time..

    the ceos are now working for $1.00 with all the perks $21 million in commission i would work for nothing when the perks are given up then i would say give them a helping hand.

    let all the big wigs read this and if you know someone who is in this industry then tell them about this post, thanks

    December 4, 2008 11:41 am at 11:41 am |
  11. Amia in ATL

    NO BAILOUT unless it's for regular people! I hope they don't get a dog gone thing!

    December 4, 2008 11:44 am at 11:44 am |
  12. James

    Cant say enough that this is a chance to change, either they include a restructuring of the industry to better fit the times as far as fuel dependency and affordability, if they cant do that, let em go baby. What a chance to get out of this mess alot of Republicans keep sticking us in, Democrats been saying for years and years and years to save money, and turn the tide on the oil problem, has nothing to do with liberals like alot of brainwashed cases might like to think, its just common sense. Losing jobs is the problem, but id imagine there are peolpe ready to fill the void, its America after all, i mean they've had the technology for some time now......anyway whatever the case this is one of those things that isnt as simple as some may wish, another reason im happy we have a Democratic president finally, but god only knows what agenda theyll push in the final days. I just wouldnt be so quick to be distracted by how much their flight cost, keep your eye on the ball, keep getting caught up in the media BS people. Forgetting how normal it is for everyday millionairse to fly places, i mean we sit here bickering over that while they ask for billions of dollars...Sometimes i think MTV has infultrated the news. Anyway stop being so simple minded people get with the program.

    December 4, 2008 11:44 am at 11:44 am |
  13. imobro

    I saw Michael Moore last night. He had a great message that I agree with. GET RID OF THE TOP DECISION MAKERS AT FORD, GM, AND CHRYSLER. Put some younger thinkers at the top, all 3 companies HAD a change to make more fuel efficient cars. They had years to do it now they want the tax payers to do it at the expense of the hourly workers. NO FORESIGHT, THINKING AHEAD. . et I hope our government puts so many strings on the LOAN the ones at the top will resign on their own because they won't be able to live like KINGS and the workers live hand to mouth.

    December 4, 2008 11:45 am at 11:45 am |
  14. A.E.

    34 billion here, 34 billion there. When does this stop? The only thing worse than these corrupt incompetent businessmen are the politicians willing to bail them out at our expense.

    Ask the American Nissan worker or the American Honda worker. They are not suffering under the same environment. So the big 3 are just lousy companies. Unfortunate for the workers. But if there is a demand for cars, they will get picked up by the companies that work best. If there is no demand for cars, the bail out will not save their jobs either. So, save the 34 billion for jobs retraining for the loyal workforce that was poor lead.

    December 4, 2008 11:45 am at 11:45 am |
  15. Vigla

    The "crappy" cars they made were being bought, by us "narrrow minded" consumers. While they deserve some blame for the crisis they are in, I doubt anyone was prepared for the triple whammy of high fuel prices, the credit crunch, and major recession that occurred.

    So let's stop the bashing, shall we? If the auto industry fails, what exactly will we actually "build" here anymore? Yup, NADA! Too much is at stake here. We've already ceded too much to the Chinese and others.

    I for one, support a bridge loan to the automakers. At least they were trying to satisfy demand. The financial bailout is far worse.

    December 4, 2008 11:46 am at 11:46 am |
  16. Ernie, WI

    They make crappy cars! Let 'em fail!

    December 4, 2008 11:48 am at 11:48 am |
  17. Vicki5

    If the companies are not worth 34 billion, then why would we loan them that much? If we are going to lend them much more than they are worth, then it's not a loan, but a buy-out, and we get to call the shots on what to build and what to pay executives. I

    And, Paulson & Bush think they have made away with 700 billion dollars, unaccounted for. I say, think again. It may take awhile, but accountability will come. I know we shouldn't wish bad things on other people, but these two make it extemely difficult. At the very least, they should feel a sick feeling of stress in their stomachs the way they have made citizens feel from fear and angst.

    December 4, 2008 11:48 am at 11:48 am |
  18. J.C.

    Looking at so many unsold cars this year, I don't see why we should help the big three produce more cars for next year. What we need is exactly what the White House insisted: Give money for the big three to do research on energy-efficient cars.

    I will add to send the willing auto workers to get more education with vouchers. This will help transform their unproductive jobs into better ones. Obviously, we don't need so many auto workers. The belief is that if you keep your company big, the government won't let you fail. This is one of the incentives that drove the big three to stay inefficient. Why should we re-enforce that belief by bailing them out?

    We don't need three inefficient big automakers. Two would be plenty. Giving more money for them to repeat the same mistakes longer will be another big mistake. Had we given 25 B to them earlier, it would not have helped as we can see now.

    December 4, 2008 11:49 am at 11:49 am |
  19. KT

    I can't help but agree with Matt. Maybe without the Big 3 around stifling new technology (think the Tucker of the 40's, the EV1 of the 90's...), perhaps the resources and market share will open up to some truly inventive and affordable new automotive technology.

    December 4, 2008 11:51 am at 11:51 am |
  20. Robert Welch

    These Companies GM, Ford and Chrysler represent Americana. I'm a taxpayer and I say give them the Money. My tax money went to AIG and Citigroup I had no say. I'd rather it go to save the Greatest American Industry we've ever had.

    December 4, 2008 11:51 am at 11:51 am |
  21. Ken in Dallas

    Matt,

    This shouldn't be about addressing past transgressions, because that's fundamentally petty, and a waste of time. Try to think about what it takes to build the future. I agree that the car makers' current management is more or less irrelevant, so let's focus on creating a transportation industry that's viable for the future.

    Stop thinking so small.

    December 4, 2008 11:53 am at 11:53 am |
  22. True Blue Ohio

    I do not think they should be given the oppurtunity to mismanage even more money. And if they can afford to work for a dollar, that means they have been grossly overpaid for years.

    December 4, 2008 11:55 am at 11:55 am |
  23. Bail Me Out

    I ran my business into the ground making bad decisions. Where's MY bailout?

    December 4, 2008 11:55 am at 11:55 am |
  24. Tim

    I think they should get $.35 from the government so they can call someone who cares. I will give it to them myself if I have to. Say NO to bailout.

    December 4, 2008 11:55 am at 11:55 am |
  25. Jim Colorado

    What some people fail to realize is public demand drives the industry to create what they want. Just as well as the vote we cast for a new change in political policies. How many states are in trouble looking for federal money? Aig got hunderds of billions with no promise of repayment. The big three ask for less than fourty billion to save over a million jobs? Wake up folks help your fellow worker.

    December 4, 2008 11:56 am at 11:56 am |
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