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GM, Ford Fight To Keep Government Bailouts, Say Detroit Is Not Wall Street

Posted in auto industry, Cars, Chrysler, Ford, GM, Newsworthy by Suzanne Denbow | September 17th, 2008 | 2 Responses |

Earlier this month, mortgage lending giants Fannie Mae and Freddie Mac, which collectively own or guarantee roughly $5 trillion in mortgages, were seized by the U.S. government to prevent an even more catastrophic housing industry collapse. Last week, when global investment firm Lehman Brothers began to go belly up, the federal government wasn’t nearly as charitable and on Monday, Lehman Brothers headed into bankruptcy. Watching the events unfold from Detroit, GM, Ford, and Chrysler have begun to get nervous.

With the failure of Lehman Brothers, some auto industry analysts fear the government has drawn a line on federal intervention, just when the Detroit 3 need it most. Getting proactive, teams of lobbyists and executives representing the biggest auto manufacturers have begun to flood Washington, hoping to remind them that Detroit is not Wall Street. “[It’s] a very separable issue,” said Ford. Still, lawmakers are approaching the loan requests with caution, and the foot dragging is yielding to frustration. According to Auto News, GM CEO Rick Wagoner was quoted explaining to the press, “The financial markets have worsened so much since the energy security act was passed last year, that providing the loans would seem to be the appropriate and fair thing to do right now.”

Other accounts report that auto makers are cautiously optimistic that they’ll receive the bailouts they need, and as of right now, no one is planning on shutting their doors. Said Wagoner, “I can’t really say at this point that I’ve seen specific ramifications from yesterday’s actions [referring to the Lehman Brothers failure], but we have to watch that closely.”

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2 Responses

  1. LeeShep says:

    I find this endlessly fascinating. The government ponied up for AIG because it was ‘too big to fail’. I can’t help but think that GM or Ford would be able to get similar packages. At what point does the gvmt say that they literally can’t afford it, or are we just way past that point by now?

  2. Joe says:

    I honestly wish that I could run my company into the ground and pick up the phone and ask to bailed out. nope. never going to happen.

    tax dollars at work.