We had doubted the earlier Bloomberg report claiming a deal had been cinched, since an hour later, there was no corroborating report. So now a rescue falls to Paulson.
From the Washington Post:
An eleventh-hour effort to salvage a proposed $14 billion rescue plan for the auto industry collapsed tonight as Republicans and Democrats failed to agree on the timing of deep wage cuts for union workers, killing the legislative plan and threatening America’s carmakers with bankruptcy.
“We’re not going to get to the finish. That’s just the way it is. There too much difference between the two sides,” Senate Majority Leader Harry M. Reid (D-Nev.) announced after 10 p.m., concluding a marathon negotiating session that ended in gridlock. Reid warned that markets could plummet when trading begins this morning.
A bit of crow-eating from Bloomberg:
Senate negotiations for a U.S. automaker bailout plan collapsed, in a blow to General Motors Corp. and Chrysler LLC, which may run out of cash early next year.
“It’s over with,” Majority Leader Harry Reid said on the Senate floor in Washington. “I dread looking at Wall Street tomorrow. It’s not going to be a pleasant sight.”…
Asian stocks and U.S. index futures immediately began falling after Reid’s comments. The MSCI Asia Pacific Index slumped 2.2 percent to 86.13 as of 12:33 p.m. Tokyo time, while March futures on the Standard & Poor’s 500 Index slipped 3.4 percent.
Connecticut Democrat Christopher Dodd, who helped lead the negotiations, said the final unresolved issue was a Republican demand that unionized autoworkers accept a reduction in wages next year, rather than later, to match those of U.S. autoworkers who work for foreign-owned companies, such as Toyota Motor Corp.
“More than saddened, I’m worried this evening about what we’re doing with an iconic industry,” Dodd said. “In the midst of deeply troubling economic times we are going to add to that substantially.”
Republican Bob Corker of Tennessee, who negotiated with Dodd, said, “I think there’s still a way to make this happen.”
25 comments
Comments are closed.
How many billions of dollars will be wiped out in the stock market until a few republicans saw uncle? Let’s start a betting game.
Utter failure of leadership by Reid (to guarantee D votes) and Obama (to go to Washington and lecture R leaders on this).
I can’t wait until VW asks for some more money for their plant in Tennessee. That baby was built to get VW production into the dollar zone –and now that the dollar is looking to be strong for 2-3 years that plant makes no sense.
The leaders of this compromise have been very loud in repeatedly claiming there was a successful agreement in various permutations. I personally believe that’s irresponsible at best and a reprehensible negotiating tactic at worst.
Every time I hear, “there’s a broad and growing consensus that…” I cringe.
Nevertheless, the game just changed again, and I’m not convinced Paulson and the Bush administration have a predisposition towards this allocation of funds. There’s probably a lot of banker left in Paulson somewhere, but it could be a political football at this point, and I as a rule avoid and know nothing of politics.
This does make it very difficult to claim that any bailout money has gone towards preservation of jobs, beyond the CP facility, doesn’t it? Maybe I forgot some other of the myriad programs, but…
This is a legacy of the Civil War. It’s the perverse and hateful political culture of the South taking its revenge on American prosperity.
I’ve always wanted to cut those states loose. Maybe now there will be others who agree with me!
I’ve always wanted to cut those states loose. Maybe now there will be others who agree with me!
You should’ve voted for Colbert. He doesn’t seem to have done well in the primaries, though, so you’ll probably have to raise your own army.
“It’s over with,” Majority Leader Harry Reid said on the Senate floor in Washington. “I dread looking at Wall Street tomorrow. It’s not going to be a pleasant sight.”
When did the primary measure of Congress’s policymaking become the performance of the stock market the next day?
Exxon needs to donate to the bail-out-an-oil-junkie fund.
Ironically this development now paves the way for direct taxpayer anal penetration via TARP or other alphabet soup. If GM can find some way, any way to hang on just until Obama’s first day, they are essentially out of near-term danger.
It would take more money than God to make these companies profitable again. Which is what I expect the Democrats to print to try to save them. CPR on a cadaver.
I was going to buy some stock in Remington Arms company tomorrow, but wow, looks like Cerberus owns the whole kit’n’kaboodle.
Heads Cerberus wins, Tails we lose…
Merry X-mas… I bet the suppliers start announcing layoffs tomorrow, no sense waiting for the bk filing, they ain’t getting paid…
Sen. Corker, Sen Kyl, and Sen Shelby, I, on behalf of my 80 year-old widowed grandmother, who survives on a GM pension – salute your patriotism. My tax money was MUCH better spent on AIG.
CDS handgernades with the pin pulled out. Uh-Oh!
Wall street IB’s get hundreds of billions in days with NO oversight or any strings attached.
Millions may be out of work (even 500K is a lot) and this will hurt the real economy.
I truly wonder if this is all staged to make it look like they tried real hard.
I think the whole point was to fire/restructure labour costs and screw the well paid employees and unions over.
Only in a ‘crisis’, engineered or not, can you accomplish what seems impossible in better times.
I think this is about crushing the union and pensioners. Now that hey are over a barrell, what can they say?
If congress truly is against bailouts they are a little late – all the money is GONE into the black holes called banks. The autos simply want the scraps.
Thomas Jefferson – ye knew the bankers too well!
You probably don’t want to cut loose the southern states as their tax dollars will be needed to bail out the NE, midwest, and Western states that crushing fiscal deficits…..
Something will be done. In the end Paulson would seem to have broad authority to use TARP funds, and I imagine the White House would direct him to steer some of that money to the automakers if this bail cannot progress.
What a market. Even if you decide there is too much risk to wade in — and who could blame you — or are not always on the right side of trades if you do, you have to be amazed at the movements and the profit potential.
I reckon the PPT just got another “BUY” signal :)
everyone should be cheering this event.
Asian markets are not taking the news well.
Now the money has to come from TARP. TARP has only 15B left and Paulson is not going to release it without a sign-off on the second TARP installment. To do that the congress has to come back from recess and I don’t know how difficult it will be to reconvene congress, have useless debates, do arm twisting etc. etc. and have a sign-off during this break.
This, then congress goes on a well-earned vacation while rome burns…
I’m PROUD to be an American…
@ ndk
“Every time I hear, “there’s a broad and growing consensus that…” I cringe.”
Here, Here!
Euphemisms of any ilk that smack of reasssureances and false security makes me cringe as well
@anon 12.36
good point, rome burns and lawmakers (pelosi) calls a recess
Hard to see how this constitutes ‘revenge on American prosperity’ given that the automakers had no connection to prosperity whatsoever for a decade or more.
I think that this is the right outcome for this negotiation. Things can be fixed up in Ch. 11, that is the right destination.
But especially after this, there had better not be Wall Street bonuses this year, top to bottom. TARP money cannot go to bonuses.
anon 11:30 pm
agreed, they should definitely stand and take responsibility.
also it is open season on all publick employees unions and pensions including police, fire, teachers, congressmen, senators, etc. cut them all.
But especially after this, there had better not be Wall Street bonuses this year, top to bottom. TARP money cannot go to bonuses.
Stamping your feet won’t make it so. They don’t give a damn what you think.
“It’s over with,” Majority Leader Harry Reid said on the Senate floor in Washington. “I dread looking at Wall Street tomorrow. It’s not going to be a pleasant sight.”…
i bet he was referring to bankers being mad they have to share their TARP loot with union workers.
To 11:07
Your blaming of Dems and Obama illustrates your blind loyalty to the Republican way.
Many to blame here. Obama is NOT the President, he’s the President Elect. Bush is nowhere to be found. Guess what = he’s the President who should be dealing with this, sez The Constitution. shesh!
Now that Madoff is looking for a new job, perhaps he can turn around Detroit (both the city and the plants).
I don’t believe anything the auto companies, unions and washington say.
This is not about an industry, its about a business model for some plants that does not work and must be readically changed. There are federal judges experienced and impartial to take care of this, but putting it in the hands of the power brokers in Chicago or DC makes no sense to me.