I received a note from a friend, over the weekend, telling why we should support the bailout for the automakers.  He correctly pointed out that the "bailout" is actually a $25 billion loan that must be repaid to the Federal Government.

A quick review.  Here's the current market capitalization of the auto makers (ie. what the stock market thinks these firms are worth):
        
                GM        $1.8 Billion
                Ford      $3.4 Billion
                *Chrys   $2.6 Billion (Chrysler is privately owned, so this is simply an estimate)
                TOTAL    $7.8 Billion

So, three companies, with a total value of only $7.8 Billion would like a loan for more than 3 times that amount to keep them afloat!  Again, this is a loan for firms that haven't made a profit in years.

The Big Three and the UAW have all pledged that they will to work together to succeed (conditioned on getting the bailout).  I'm all for that. 

If the UAW is committed to the future success, they should pledge their pension fund assets as security for the loan.  Then, we'll know they have their "chips in the game".  

If the UAW pledged their pension fund to the bailout - I think I could support it.


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So Congress has sent the Big Three back to Detroit to concoct the plan for grabbing $25 billion from the US Treasury.
Congress will review the formal plan to be submitted by the auto execs.

And guess who's reviewing the plan?

None other than the Chairman of the Senate Banking Committee, Senator Chris Dodd, and Chairman of the House Financial Committee, Congressman Barney Frank.   Well now I'll sleep better at night, knowing these two "detail" guys will be pouring over the plan.  Their "blessing" will really add to the credibility of Congress's consideration of the package. 

Allow me to elaborate:



Senator Chris Dodd received a "sweet heart" mortgage from Countrywide Financial - directly from the chairman of that firm.  Of course, Senator Dodd saw nothing wrong with calling the Countrywide head to discuss his mortgage needs.  His ethical blinders still don't see the problem with him receiving preferential loans from an organization over which he has direct control and influence.  And the fact that Senator Dodd was advocating massive bailouts for Countrywide were completely unrelated to "special" terms he had received from them (right....).  (Look for Senator Dodd and family to be driving new Cadillacs after the bailout package is approved.).




And then there is Barney "double standard" Frank.  Congressman Frank, for years, squired a live-in lover who was actually running a prostitution ring from their Georgetown home.  Congressman Frank was given a pass, as he is gay.  (Gary Hart was tossed overboard for having a companion sit on his lap.  While, nary an eyebrow was raised over the fact that Frank and friend were covering household living expenses with their illegal activity).   Congressman Frank was awarded his coveted chairmanship as a reward.

And like the late night infomercials famous tag line, "but wait........there's more'.  Congressman Frank's most recent companion was Herb Moses.  Mr. Moses was an executive with the infamous Fannie Mae organization.  The Moses and Frank connection lasted for nearly 10 years, or just long enough for Congressman Frank to clear the path for Fannie Mae's wanton  activities.  OH, and long enough for Fannie Mae to donate more than $40,000 to the Frank campaign.  

Frankly, Dodd and Frank's ineptness makes me think they've been advising the domestic car manufacturers for decades!