Bush "kicks the can," loans Big Three $17 billion

Well, in my book, President George W. Bush is leaving office on a very sour note.
He's extending a bailout, or a partial one, to the Big Three automakers. The best way out of the mess Detroit created is a painful step, Chapter 11 bankruptcy reorganization. That might still happen, in fact, I think it will. So Bush is "kicking the can" on this one.

From the Wall Street Journal:

The deal is contingent on the companies' showing that they are financially viable by March 31. If they aren't, the loans will be called and all funds must be returned, officials said.

Sometime in April, the federal government, I believe, will be in the car business. Good gawd...

More...

The deal generally tracks key provisions of the bailout legislation that nearly passed Congress earlier this month. But it is relatively lenient in allowing the companies to show their viability. It defines viability as having a positive net present value -- a way of gauging the companies' worth, taking into account all their future obligations.

Notably, it provides significant flexibility to the companies in showing their viability. It sets out targets for the companies to hit in determining their financial health, such as reducing debt and current cash payments for future health care obligations.

But according to a White House fact sheet, the targets "would be non-binding in the sense that negotiations can deviate from the quantitative targets...providing that the [company] reports the reasons for these deviations and makes the business case to achieve long-term viability in spite of the deviations."

Back to March 31, from the Detroit Free Press:

(Bush) left the door open for the automakers to file for bankruptcy after March 31 if they cannot prove they are on the road to sustained viability by then and called on all parties – workers, management, creditors, suppliers and dealers – to make the "meaningful concessions" needed to protect the industry’s future.

By that time Barack Obama will be president. In speech he gave in 2007 in Detroit, Obama scolded automakers for not making fuel-efficient cars, while he drove a gas-guzzler.

The following sentence works on several levels: We are in for a bumpy ride.

Related post:

Poll: Most Americans oppose auto bailout

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