Auto Bridge Loan Fails in Senate

Posted by BooMan | Dec 11, 2008 | 23 |

The Senate voted 52-35 for cloture on the Auto bridge loan bill. Failing to reach sixty votes, the Senate will now go home for the holidays, leaving General Motors to go bankrupt. Chrysler will follow shortly after, and then supplier after supplier. Eventually, Ford will also succumb, and the foreign automakers will see their production disrupted by supply chain problems.

Ten Republican senators crossed the aisle to vote with the Democrats, but unfortunately the Democrats did not have Biden and Obama’s votes, several Democrats did not vote, ~~a couple of~~ three Democrats voted against. Harry Reid initially voted yes (meaning we had 53 votes) but changed it to ‘no’ for procedural reasons.

The only hope for the auto industry now is that TARP money is used to float GM until the 111th Congress can be sworn in.

Update [2008-12-12 0:8:18 by BooMan]: Blanche Lincoln, Max Baucus, and Jon Tester voted against cloture. John Kerry, Ted Kennedy, Ron Wyden, and Joe Biden did not vote.

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BooMan

Martin Longman a contributing editor at the Washington Monthly. He is also the founder of Booman Tribune and Progress Pond. He has a degree in philosophy from Western Michigan University.

23 Comments

Man Eegee on December 11, 2008 at 11:57 pm

didn’t the Democrats want the TARP scenario to begin with?
- BooMan on December 12, 2008 at 12:09 am
  
  yes.
  - Man Eegee on December 12, 2008 at 12:14 am
    
    so the next step is to kick up the pressure on Paulson to shift the funnel towards the big three.
    
    that would make me feel much better than seeing it go to AIG staff retreats
    - BooMan on December 12, 2008 at 12:26 am
      
      Washington, D.C.– Senate Majority Leader Harry Reid, House Speaker Nancy Pelosi, Senate Banking Committee Chairman Chris Dodd and House Financial Services Committee Chairman Barney Frank today sent a letter to President George W. Bush to again urge him to use the authority provided under the Troubled Assets Relief Program (TARP) of the Emergency Economic Stabilization Act (EESA) of 2008 to provide limited, temporary assistance to the automobile industry during this financial crisis. The letter notes that the failure of the Big 3 would have a major direct and negative impact on the financial sector, not just on the economy as a whole. The Treasury Department has stated that funding from the EESA should only be used to protect the U.S. financial sector.
      
      In the letter, they further state: “Your decision to utilize the TARP funds, or to work with the Federal Reserve to make available assistance through its existing lending programs, or both, are essential to the Congress’ ability to address this critical economic situation in a timely manner, and would also eliminate the uncertainties inherent in the legislative process.”
      
      Below is the text of the letter:
      
      Dear Mr. President:
      
      This week the U.S. domestic auto industry submitted their comprehensive plans for restructuring their companies and moving promptly to produce more fuel-efficient, advanced technology vehicles which are essential for their economic future and for the environmental needs of our world. Hearings are underway in the House and Senate Committees into those plans, but it is already clear that action should be taken by the federal government to facilitate the implementation of these restructuring efforts and prevent the severe impacts to our economy that would result from the bankruptcy of one or more of these companies.
      
      We have previously urged that $25 billion of the funds provided in the Emergency Economic Stabilization Act (EESA) can and should be used for emergency bridge loans for the domestic auto industry. The response from the Treasury to date has been that these funds should only be used to protect the U.S. financial sector. What is becoming clear, however, is that the failure of the Big 3 would indeed have a major direct and negative impact on the financial sector, not just on the economy as a whole.
      
      We again urge you to use funds available to you through the EESA to provide emergency bridge loans to the auto industry. In testimony before the Senate Banking Committee today, Acting Comptroller General Gene Dodaro indicated not only that the Treasury has the authority under EESA to do so, but that the Federal Reserve also has the authority to provide assistance to the auto companies. We agree with the Government Accountability Office’s (GAO) assessment and urge you to consider this option in conjunction with funds from EESA. It is essential to take this action not only in light of the new evidence about the impact of the failure of the auto industry on the financial sector, but also in light of the industry’s plans which have been submitted to the Congress this week. Those plans include the imposition of tough accountability through establishment of an Oversight Board to oversee the disbursal and uses of the loans, a feature that also was included in the Reid and Levin-Bond bills introduced in the Senate as well as the legislation proposed by Barney Frank in the House last month. In its testimony before the Senate Banking Committee today, the GAO endorsed this principle.
      
      While an immediate loan must be a necessary of part of this effort, the Oversight Board should review on an ongoing basis the adequacy of progress in implementing the auto industry’s plans and make recommendations to the Treasury Department as it administers the loan. You have the power to appoint such a board at the same time that you direct the Secretary of the Treasury to use the EESA funds for these loans.
      
      The Troubled Assets Relief Program (TARP) under EESA was created specifically to stabilize the financial system from threats such as the imminent failure of large sectors of the automobile and related industries. Recent research by a prominent financial firm concludes that the auto sector represents one of the largest sectors in leverage finance for banks because of their large number of high-yield bonds they have issued and that the companies’ failures would result in “credit crisis part II.” The Ford Motor Company has concluded that the “Detroit 3, plus their suppliers create a $1.1 trillion gross exposure to the U.S. financial system,” and that “increasing the financial sector’s negative exposure by up to $1 trillion and reducing the economic activity by up to $800 billion will greatly exacerbate the current negative economic and financial climate.”
      
      Congress may consider legislation to provide assistance to the domestic automobile industry next week. Your decision to utilize the TARP funds, or to work with the Federal Reserve to make available assistance through its existing lending programs, or both, are essential to the Congress’ ability to address this critical economic situation in a timely manner, and would also eliminate the uncertainties inherent in the legislative process.
      
      We are very hopeful that we can work cooperatively with the Administration and the Federal Reserve to provide urgent assistance and support our domestic auto industry, just as other nations are doing, during this extraordinarily difficult global economic collapse. We look forward to hearing from you on an expedited basis, since we will be notifying colleagues tomorrow of next week’s session.
      Sincerely,
      
      Rep. Nancy Pelosi Senator Harry Reid
      Rep. Barney Frank Senator Christopher J. Dodd
      - no3reed on December 12, 2008 at 12:33 am
        
        That letter might as well have come in an envelope stamped “Crumple and discard upon receipt” for all the effect it will have on its addressee.
      - MNPundit on December 12, 2008 at 2:31 am
        
        Bush is already floating the idea.
      - no3reed on December 12, 2008 at 9:55 am
        
        Well, I’ll be glad to be wrong. It is a switch, though.
MikeInOhio on December 11, 2008 at 11:59 pm

These goddamn shitheads in Washington are not worth a f@#$ing damn!! Why in the hell would a damn Democrat NOT VOTE ON THIS!!

I am just goddamn sick and tired of the incompetence, stupidity and spinelessness of the whole fucking lot in Washington. These shit for brains assholes are totally and unequivocally worthless.

Get ready for one crazy damn ride. If people think things have been bad up to now then they are in for a real treat, courtesy of our worthless Washington politicos who will now go home to their own safe and comfortable little worlds to celebrate the holidays in the true style of our elite Washington upper class. With their good health care, pensions to die for and safe in the knowledge that they have finally fucked the middle class into extinction.

Good job, assholes. I’m sure you are god-damned proud of yourselves.
- BooMan on December 12, 2008 at 12:12 am
  
  Kerry and Wyden, I don’t know.
  
  Biden hasn’t been voting, although he might have shown up if his vote was going to make a difference.
  
  Kennedy has health issues.
  
  Tester and Baucus voted against, probably because their state doesn’t make cars and hates the federal government.
  
  Lincoln voted against because she comes from Arkansas and doesn’t have the same compassion as Mark Pryor.
  
  I dunno, it is what it is.
  - MNPundit on December 12, 2008 at 2:32 am
    
    Open Lefters are saying Kerry is in Poland right now for some reason.
    - robertdsc on December 12, 2008 at 5:20 am
      
      In Poznan for a climate change forum.
      - Quentin on December 12, 2008 at 7:36 am
        
        Environmental celebrity!
      - canberra boy on December 12, 2008 at 9:12 am
        
        Not a climate change forum… it’s the climate change forum – the 14th Convention of the Parties to the UN Framework Convention on Climate Change ;-).
- Dongi 2 on December 12, 2008 at 6:57 am
  
  You got that right, Mike, “elite, upper class”. As you know, the Senate is a millionaires club whose members first priority is to protecting their own wealth and prosperity. It’s kind of a trickle down philosophy ala St. Ronnie Reagan.
  
  The only remedy, other than massive demonstrations in DC and, perhaps, revolution, is at the ballot box. To have success there, though, the establishment press and media must be overcome. Not an easy accomplishment. cf video on Noam Chomsky. “Manufacturing Consent”.
  
  If and when the suffering becomes deep and widespread, with countless people living in abandoned cars and underneath bridges, then, the unwashed masses might wake up and start supporting progressive legislators. Until then, America is going to e a very sad place. Unfortunately.
maryb2004 on December 12, 2008 at 12:08 am

So … when I click the link the only cloture vote listed for today was for the Alternative Minimum Tax relief act? Was it buried in that or something?
- BooMan on December 12, 2008 at 12:10 am
  
  yup.
  - pinky on December 12, 2008 at 2:22 am
    
    http://www.freep.com/article/20081211/BUSINESS01/81212001
billjpa on December 12, 2008 at 6:06 am

well, if anyone thinks that there is a resting period since the O man won, guess what! this vote should be the wakeup call. every single gooper that voted against this loan should be put right in the bullseye for 2010! Dead Center!
it’s time to start organizing folks. no time outs!!!
btchakir on December 12, 2008 at 7:24 am

Looks like we might actually get to a full scale Depression after the Senate Republicans, led by southern senators with foreign car companies based in their states, shot down the $14 BillionBig 3 bailout.

Richard Shelby of Alabama cried the crocodile tears for the Repubs saying that the Big 3 didn’t know how to be competitive any more and that bailouts don’t work.

GM and Chrysler will probably go bankrupt and restructure…but this will put thousands, or hundreds of thousands, of people on unemployment for short or long terms.

The anti-union stance of the Republicans will come back to bite them in the ass… the fact that Mitch McConnell and his buddies don’t realize this is a sign that the change we have all wished for with Obama will have considerable, short-visioned competition from the old guard right.

So have a Merry Christmas, autoworkers. We’ll get back to you in January.

Under The LobsterScope
keepinon on December 12, 2008 at 10:17 am

If you want to know what chutzpah is, try this on for size. Sen Jim Bunning (R-Ky.) is a former Detroit Tiger/Philadelphia Phillies pitcher. In the Hall of Fame and all of that. He is scheduled to appear at the Gibraltar Trade Center in Taylor Mi. this Sunday to sign baseballs, posters, jerseys or gloves at prices ranging from $35.00 to $55.00 a pop. This from Brian Dickerson in today’s Detroit Free Press. Will he fly up here in a private jet?? Or maybe drive a Toyota?? My head hurts.
- Teacher Toni on December 12, 2008 at 10:22 am
  
  How did he vote? It would be great if a bunch of the unemployed people showed up to gawk at him and chew him out, but not to get an autograph.
  - keepinon on December 12, 2008 at 11:23 am
    
    He voted no with the other Southern GOP Senators and a few Dems. See the link to the roll call vote upstream. I could be wrong Toni, but if Senator Bunning does show up in Taylor there may be a few “fans” that are there to voice their concern with his stance.
    - keepinon on December 12, 2008 at 12:18 pm
      
      According to a commenter at the Det. Free Press web site, the Bunning appearance in Taylor, Mi. on Sunday has been cancelled. Was it something Brian said??

Auto Bridge Loan Fails in Senate

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BooMan

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