Is it really a ‘bridge loan’ for the auto makers?

November 19, 2008 at 11:09 pm Leave a comment

  1. Many banks have been loaned (some forcibly in fact) funds by the Feds under the TARP program.  If indeed the auto makers are seeking a temporary bridge loan, they can surely approach these banks and ask them for one.  So either the banks won’t lend to them because they don’t think they will be viable after a bridge loan.  Or the industry is just shamelessly looking for a loan at below-market interests that, unlike the banks, may not even require hard assets as collateral.  If that is the case, then stop using words like “catastrophic failures”.
  2. Why aren’t value vultures, er, investors, like Warren Buffet not rushing to invest in these companies.  He can buy GM outright for $1.7 billion as of today’s closing prices.  Pocket change for someone who provided $3 billion to GE after one phone call.  Why did Kerkorian unload his stake in Ford, at a loss of over $700 million and 70% of his original investment?  Do these ‘rich’ guys know something that Congress does not?
  3. The Big Three already owe hundreds of billions of dollars in debt and payments to suppliers.  GM alone owes $60 billion in payments to suppliers.  Why won’t their suppliers and debt holders not extend additional credit to them?

Or are these ‘bridge loans’ really intended to fund union-run pension and health care trusts with tax-payer money before the companies go bust?

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NO bailout for the auto industry

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