WASHINGTON- General Motors chief Rick Wagoner got the call at 8 p.m. a week before Christmas. Bailout billions were on the way–finally–for his once mighty but now sinking company along with Chrysler LLC.
WASHINGTON- General Motors chief Rick Wagoner got the call at 8 p.m. a week before Christmas.
Bailout billions were on the way–finally–for his once mighty but now sinking company along with Chrysler LLC. Terms for $17.4 billion in bridge loans came through from Washington at around 2:30 a.m., and executives pored over the details until daybreak.
At least one wore the previous day’s clothes as he watched President George W. Bush announce the aid at the White House on Friday.
It was hardly the first all-nighter that Detroit’s Big Three auto executives, the United Auto Workers and the officials in Washington had pulled in six weeks of drama leading up to the White House’s announcement.
High-stakes talks unfolded against a backdrop of a battered economy and a historic transition from one presidential administration to the next as GM and Chrysler teetered on the brink of collapse, promising more pain–economic and political.
The negotiations were shaped by a bailout-fatigued post-election Congress; a lame-duck president worried about his legacy; and auto executives and unions scrambling to remake themselves as their industry’s way of life slid toward oblivion.
On the sidelines was President-elect Barack Obama, reluctant until the end to play a major role, although he will own the outcome.
The bailout began taking shape just after Election Day, Nov. 4. Executives from GM and Chrysler, which had been in merger talks geared toward stabilizing themselves, gathered in House Speaker Nancy Pelosi’s ornate Capitol office with officials from Ford Motor Co. to say things were worse than they had initially thought.
They were burning through cash at an alarming rate, they told Pelosi, D-Calif., and Senate Majority Leader Harry Reid, DNev., and needed $25 billion just to stay afloat until New Year’s.
Rep. John Dingell, D-Mich., at 82 and the longest-serving member of the House, was in a wheelchair after recent knee replacement surgery and wearing a black warm-up suit at the late-afternoon meeting–the personification of the limping industry he was fighting to save.
By week’s end, Pelosi and Reid had fired off a letter asking Treasury Secretary Henry Paulson to tap the Wall Street rescue fund to help the carmakers.
Bush’s team said no–any aid would have to come from an existing $25 billion program for the production of fuel-efficient cars.
In the thick of the stalemate, Wagoner, Ford chief executive Alan Mulally and his Chrysler counterpart Bob Nardelli boarded private jets to make the trip from Detroit to Washington for high-profile congressional hearings to beg for the aid.
“It’s almost like seeing a guy show up at the soup kitchen in high hat and tuxedo,” groused Rep. Gary Ackerman, D-N.Y.
Members of the House and Senate, many still smarting from the political sting of having backed the $700 billion bank bailout, were outraged.
So it wasn’t too surprising when, days later, Democratic leaders scrapped votes on the auto bailout.
“Until they show us the plan, we cannot show them the money,” Pelosi said.
The White House said Bush had “no appetite” to act on his own. Any rescue was off until after Thanksgiving.
Like underachieving children scolded by an irate teacher, the Big Three were given holiday homework: come back for another round of hearings with written restructuring plans in hand.
The return trip was nothing like the first. Nardelli, Mulally and Wagoner road-tripped in separate fuel-efficient vehicles, making the 520-mile trip from Detroit along the highways of four states. Wagoner lunched at Quiznos and gassed up at a Pilot station.
The second round of hearings went better. Some lawmakers even sympathized publicly with the penitent auto chiefs for a public shaming that bailed-out banks never had to endure.
“I’m sure you all feel a little singled out,” Rep. Spencer Bachus, RAla., told them. “There seems to be a glaring double standard.”
A breakthrough came that Friday, when Pelosi broke with environmentalists and dropped her opposition to using the fuel-efficiency money for the bailout.
Aides to Rep. Barney Frank, DMass., the House Financial Services Committee chairman, and Sen. Chris Dodd, D-Conn., the Senate Banking, Housing and Urban Affairs Committee chairman, spent the weekend hammering out details of a compromise.
On Tuesday, they met in Pelosi’s office with top White House officials–deputy chief of staff Joel Kaplan, economic adviser Keith Hennessey and top lobbyist Dan Meyer–who left sounding hopeful of a deal.
Within hours, the administration was briefing reporters on a late night, hastily arranged conference call on the “conceptual agreement.”
The package, which Pelosi called “tough love” for the companies, easily passed the House on Dec. 10. But it was dead on arrival in the Senate, where Republicans were in full revolt against Bush over it.
At a private lunch in the Capitol with Vice President Dick Cheney and White House chief of staff Josh Bolten, Republicans unloaded a barrage of criticism, calling the measure weak and unacceptable. The GOP had refused to take part in the negotiations that produced the compromise.
GOP senators lined up behind Sen. Bob Corker, R-Tenn., who wanted to condition any auto aid on big concessions from labor and creditors.
After six weeks of urgent pleas, it was pretty much take it or leave it at that point. AP
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