US Auto Giants Beg for Bailout

25 November 2008

DETROIT: "Never stand begging for what you have the power to earn," the Spanish author Miguel de Cervantes once said. Such a thought is inspiring General Motors, Ford and Chrysler to head back to Washington, collective cap in hand, arguing it is simply impossible for them to turn a profit in the current economic climate.

The three ailing auto giants are seeking some $25 billion (€19.7bn; £16.6bn) in funds from the US government, and each of their ceos appeared in front of the Senate and House of Representatives last week to plead their case.

Congress has given the triumvirate until December 2 to produce detailed plans showing how they would use the funds to become financially "viable".

GM is said to be reassessing its financial situation, including its terms of debt and the money it owes the United Auto Workers union, while Ford and Chrysler are also thought to be drawing up fresh proposals.

Senator Charles Schumer (Democrat, New York)  wrote to the Federal Reserve yesterday asking it to provide finance to the lending arms of each of the "Big Three" auto firms, thus helping stimulate consumer demand.

Jennifer Granholm, the governor of Michigan who is currently advising president-elect Barack Obama on economic matters, has also said she is working with GM, Ford and Chrysler to develop a "definitive plan" regarding the proposed bailout.

Data sourced from Wall Street Journal Online; additional content by WARC staff