Top Bailout Watchdog Says Treasury Is Out Of Control

Bailout Watchdog: Where’s the Spending Plan?

Harvard professor Elizabeth Warren, the chairwoman of a congressional oversight panel, traveled to Washington Thursday to get answers on how Treasury is managing the unprecedented bailout.

The top congressional watchdog overseeing the nation’s financial bailout said Thursday she’s frustrated by the Treasury Department’s refusal to explain how it is doling out billions in taxpayer money.

Harvard law professor Elizabeth Warren, the chairwoman of a congressional oversight panel, traveled to Washington to get answers on how Treasury is managing the unprecedented bailout.

In an interview with The Associated Press, the Democratic appointee said she doesn’t understand why it’s taken so long for the Bush administration to explain its plan. Warren said she doesn’t want to believe it’s because there never was a plan for spending $700 billion in taxpayer money to rescue banks.

“I don’t buy a winter coat without a plan,” she said. “I can’t imagine how someone could think they were going to repair a failing economy and undertake spending billions of dollars in taxpayer money without a plan.”

Treasury Secretary Henry Paulson originally intended to use the money to buy risky loans from banks, freeing them to make new, safer loans. Shortly after the funds were approved, however, Paulson announced that $250 billion would instead be used to buy stock in U.S. banks.

“We’ve reversed directions more than once here, without any description of an overall strategy,” Warren said. “It’s not to say there’s not one, but I don’t think it should be such a well-hidden secret.”

Treasury spokeswoman Brookly Mclaughlin had no comment on Warren’s remarks. Treasury officials have said they are working toward several objectives, including stabilizing the financial markets, supporting the housing market and protecting taxpayers.

Nevertheless, the bailout has drawn criticisms from Republicans who oppose the huge new government program and from Democrats who want some of the money to be used to rework mortgages so homeowners can keep their houses.

The congressional oversight panel criticized Treasury last week for not saying exactly what problems they’re trying to fix or how the investments will fix them.

While Warren placed the blame squarely on Treasury for not laying out a clearer plan, she tempered any criticism of Congress, which placed few restrictions on the money as it hurriedly passed a law giving Treasury historic power to make multibillion-dollar decisions. Such requirements were omitted, she said, because the Bush administration pressured Congress to approve the bill quickly.

Paulson “was telling the Congress of the United States, ‘Do this right now,”‘ she said.

The five-member oversight panel is made up of three Democratic appointees and two Republicans. Senate Republican leader Mitch McConnell of Kentucky named outgoing Sen. John Sununu of New Hampshire to the panel Tuesday. Sununu has echoed Warren’s comments that taxpayers deserve to know how the money is being spent.

The panel is one of several entities monitoring the bailout, in addition to a special inspector general and the Government Accountability Office, a congressional auditor.

The GAO said in a critical report earlier this month that Treasury should toughen its monitoring of the bailout fund to ensure that banking institutions limit their top executives’ pay and comply with other restrictions.

http://www.foxnews.com/politics/2008/12/18/bailout-watchdog-wheres-spending-plan/

WHERE IS CONGRESS?  WHO WILL DEMAND ACCOUNTABILITY?  AND NOW CONGRESS WANTS TO SPEND BILLIONS ON AN AUTO INDUSTRY BAILOUT?

Another Reason To Oppose A Car Czar / Auto Bailout

Executive pay limits may prove toothless – Loophole in bailout provision leaves enforcement in doubt

By Amit R. Paley

updated 2 hours ago

WASHINGTON – Congress wanted to guarantee that the $700 billion financial bailout would limit the eye-popping pay of Wall Street executives, so lawmakers included a mechanism for reviewing executive compensation and penalizing firms that break the rules.

The Troubled Asset Relief Program or “TARP” stipulated that the penalty would apply only to firms that received bailout funds by selling troubled assets to the government in an auction, which was the way the Treasury Department had said it planned to use the money.

Now, however, the small change looks more like a giant loophole, according to lawmakers and legal experts. In a reversal, the Bush administration has not used auctions for any of the $335 billion committed so far from the rescue package, nor does it plan to use them in the future. Lawmakers and legal experts say the change has effectively repealed the only enforcement mechanism in the law dealing with lavish pay for top executives.

“The flimsy executive-compensation restrictions in the original bill are now all but gone,” said Sen. Charles E. Grassley (Iowa), ranking Republican on of the Senate Finance Committee.

The modification reflects how the rapidly shifting nature of the crisis and the government’s response to it have led to unexpected results that are just now beginning to be understood. The Government Accountability Office, the investigative arm of Congress, issued a critical report this month about the financial industry rescue package that said it was unclear how the Treasury would determine whether banks were following the executive-compensation rules.

Michele A. Davis, spokeswoman for the Treasury, said the agency is working to develop a policy for how it will enforce the executive-compensation rules. She would not say when the guidance would be issued or what penalties it might impose. But she said the companies promised to follow the rules in contracts with the department.

Unprecedented restrictions
The final legislation contained unprecedented restrictions on executive compensation for firms accepting money from the bailout fund. The rules limited incentives that encourage top executives to take excessive risks, provided for the recovery of bonuses based on earnings that never materialize and prohibited “golden parachute” severance pay. But several analysts said that perhaps the most effective provision was the ban on companies deducting more than $500,000 a year from their taxable income for compensation paid to their top five executives.

http://www.msnbc.msn.com/id/28232631

THE PROPOSED AUTO BAILOUT BILL [With Analysis] Part 3

PROPOSED AUTO BAILOUT BILL, Contniued – PART 3

 (b) EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE

(1) IN GENERAL

During the period in which any financial assistance under this Act remains outstanding, the eligible automobile manufacturer which received such assistance shall be subject to—

(A) the standards established by the President’s designee under paragraph (2); and          

(B) the provisions of section 162(m)(5) ofthe Internal Revenue Code of 1986, as applicable.

(2) STANDARDS REQUIRED

The President’s designee shall require any eligible automobile manufacturer which received any financial assistance under this Act to meet appropriate standards for executive compensation and corporate governance.

(3) SPECIFIC REQUIREMENTS

The standards established under paragraph (2) shall include—

(A) limits on compensation that exclude incentives for senior executive officers of an eligible automobile manufacturer which received assistance under this Act to take unnecessary and excessive risks that threaten the value of such manufacturer during the period that the loan is

outstanding;

 

 

 

 

(4) DIVESTITURE

During the period in which any financial assistance provided under this Act to any eligible automobile manufacturer is outstanding, the eligible automobile manufacturer may not own or lease any private passenger aircraft, or have any interest in such aircraft, except that such eligible automobile manufacturer shall not be treated as being iviolation of this provision with respect to any aircraft or interest in any aircraft that was owned or held by the manufacturer immediately before receiving such assistance, as long as the recipient demonstrates to the satisfaction of the President’s designee that all reasonable steps are being taken to sell or divest such aircraft or interest.

[AND THE CONGRESSMAN STOOD BEFORE THE CAMERA AND SMILED AS HE SAID, “THIS PROGRAM WILL MAKE THE AUTO COMPANIES GET RID OF THEIR FLEET OF PRIVATE JETS” – Will that actually happen – Probably not – The Auto Companies are allowed to “CHARTER” the Jets back – Does this game save the American Taxpayor any money – NO, but it makes for a great TV sound bite for the Congressman – while he pulls the wool over the publics eyes]

(5) DEFINITIONS.—For purposes of this subsection, the following definitions shall apply:

 

The term ‘‘senior executive officer’’ means an individual who is 1 of the top 5 most highly paid executives of a public company, whose compensation is required to be disclosed pursuant to the Securities Exchange Act of 1934, and any regulations issued thereunder, and non public company counterparts.

(B) GOLDEN PARACHUTE PAYMENT

The term ‘‘golden parachute payment’’ means any payment to a senior executive officer for departure from a company for any reason, except for payments for services performed or benefits accrued.

(c) PROHIBITION ON PAYMENT OF DIVIDENDS.—Except with respect to obligations owed pursuant to law to any nonaffiliated party or any existing contract with any nonaffiliated party in effect as of December 2, 2008, no dividends or distributions of any kind, or the economic equivalent thereof (as determined by the President’s designee), may be paid by any eligible automobile manufacturer which receives financial assistance under this Act, or any holding company or company that controls a majority stake in the eligible automobile manufacturer, while such financial assistance is outstanding.

[THIS WILL SIMPLY SLOW DOWN ANY POTENTIAL THE “DETROIT 3″ HAVE OF MAKING A RECOVERY – NOT ONLY DOES BANKRUPTCY REOGANIZATION NOT INVOLVE AN OUTLAY OF TAXPAYOR CASH – IMMEDIATELY AFTER THE BANKRUPTCY REORGANIZATION IS COMPLETED – THE “DETROIT 3″ CAN START PAYING DIVIDENDS IF THEY ARE MAKING ANY MONEY – WHICH COURSE OF ACTION DO YOU THINK ENCOURAGES PRIVATE INVESTMENT IN THE “DETROIT 3″]

(d) OTHER INTERESTS SUBORDINATED

(1) IN GENERAL

In the case of an eligible automobile manufacturer which received a loan under this Act, to the extent permitted by the terms of any obligation, liability, or debt of the eligible automobile manufacturer in effect as of December 2, 2008, any other obligation of such eligible automobile manufacturer shall be subordinate to such loan, and such loan shall be senior and prior to all obligations, liabilities, and debts of the eligible automobile manufacturer, and such eligible automobile manufacturer shall provide to the Government, all available security and collateral against which the loans under this Act shall be secured.  [AGAIN, THIS PROVISION WILL HINDER AND NOT ENCOURAGE PRIVATE INVESTMENT IN THE “DETROIT 3″ – A BANKRUPTCY REORGANIZATION WILL GIVE THE “DETROIT 3″ a “FRESH START” AND NOT SADDLE THEM WITH TERMS THAT WILL INHIBIT RATHER THAN ENCOURAGE NEW INVESTMENT IN THE “DETROIT 3″]

(2) APPLICABILITY IN CERTAIN CASES

In the case of an eligible automobile manufacturer referred to in paragraph (1), the securities of which are not traded on a national securities exchange, a loan under this Act to the eligible automobile manufacturer shall—

(A) be treated as a loan to any holding company of, or company that controls a majority stake in, the eligible automobile manufacturer; and

(B) be senior and prior to all obligations, liabilities, and debts of any such holding company or company that controls a majority stake in the eligible automobile manufacturer.

 

(1) DISCHARGE

A discharge under title 11, [A BANKRUPTCY REORGANIZATION – THIS BAILOUT BILL RECOGNIZES THE PROBABLITY THAT A CHAPTER 11 REORGANIZATION WILL OCCUR EVEN IF THE DETROIT 3 GET THE BAILOUT MONIES] United States Code, shall not discharge an eligible automobile manufacturer, or any successor in interest thereto, from any debt for financial assistance received pursuant to this Act.

[THERE IS A CONSIDERABLE QUESTION AS TO WHETHER THIS PROVISION WILL BE ENFORCABLE IN A COURT OF LAW IF THE “DETROIT 3″ FILE FOR BANKRUPTCY  REORGANIZATION AT A LATER TIME – IT IS A GUARANTEE THAT THE OTHER “CREDITORS” OF THE “DETROIT 3″ WILL CHALLENGE THIS PROVISION AS VIOLATING THEIR RIGHTS]  

(2) EXEMPTION.—Any financial assistance provided to an eligible automobile manufacturer under this Act shall be exempt from the automatic stay established by section 362 of title 11, United States Code.

(3) INTERESTED PARTIES

Notwithstanding any provision of title 11, United States Code, any interest in property or equity rights of the United States arising from financial assistance provided to an eligible automobile manufacturer under this Act shall remain unaffected by any plan of reorganization, except as the United States may agree to in writing.

SEC. 13. OVERSIGHT AND AUDITS.

(a) COMPTROLLER GENERAL OVERSIGHT

(1) SCOPE OF OVERSIGHT

The Comptroller General of the United States shall conduct ongoing oversight of the activities and performance of the President’s designee.

(2) CONDUCT AND ADMINISTRATION OF OVERSIGHT

(A) GAO PRESENCE

The President’s designee shall provide to the Comptroller General appropriate space and facilities for purposes of this subsection.

(B) ACCESS TO RECORDS

To the extent otherwise consistent with law, the Comptroller General shall have access, upon request, to any information, data, schedules, books, accounts, financial records, reports, files, electronic communications, or other papers, things, or property belonging to or in use by the President’s designee, at such reasonable time as the Comptroller General may request. The Comptroller General shall be afforded full facilities for verifying transactions with the balances or securities held by depositaries, fiscal agents, and custodians. The Comptroller General may make and retain copies of such books, accounts, and other records as the Comptroller General deems appropriate.

 

The Comptroller General shall submit reports of findings under this section to Congress, regularly and not less frequently than once every 60 days. The Comptroller General may also submit special reports under this subsection, as warranted by the findings of its oversight activities.

(b) SPECIAL INSPECTOR GENERAL

It shall be the duty of the Special Inspector General established under section 121 of Public Law 110-343 to conduct, supervise, and coordinate audits and investigations of the President’s designee in addition to the duties of the Special Inspector General under such section and for such purposes. The Special Inspector General shall also have the duties, responsibilities, and authorities of inspectors general under the Inspector General Act of 1978, including section 6 of such Act. In the event that the Office of the Special Inspector General is terminated, the Inspector General of the Department of the Treasury shall assume the responsibilities of the Special Inspector General under this subsection.

(c) ACCESS TO RECORDS OF BORROWERS BY GAO.

Notwithstanding any other provision of law, during the period in which any financial assistance provided under this Act is outstanding, the Comptroller General of the United States shall have access, upon request, to any information, data, schedules, books, accounts, financial records, reports, files, electronic communications, or other papers, things, or property belonging to or in use by the eligible automobile manufacturer, and any subsidiary, affiliate, or entity holding an ownership interest of 50 percent or more of such eligible automobile manufacturer (collectively referred to in this section as ‘‘related entities’’), and to any officer, director, or other agent or representative of the eligible automobile manufacturer and its related entities, at such reasonable times as the Comptroller General may request. The Comptroller General may make and retain copies of such books, accounts, and other records as the Comptroller General deems appropriate.

SEC. 14. AUTOMOBILE MANUFACTURERS’ STUDY ON POTENTIAL MANUFACTURING OF TRANSIT VEHICLES.

(a) IN GENERAL.—Each eligible automobile manufacturer which receives financial assistance under this Act shall conduct an analysis of potential uses of any excess production capacity (especially those of former sport utility vehicle producers) to make vehicles for sale to public transit agencies, including—

(1) the current and projected demand for bus and rail cars by American public transit agencies; [The Government is dictating expenditure of taxpayor funds on “studies” of demand for “buses” amd “railcars” – The Government simpoly has no business getting involved like this – everyone is trying to “make a buck” off of this situation – Just like the “TARP”] 

(2) the potential growth for both sales and supplies to such agencies in the short, medium, and long term;

(3) a description of existing ‘‘Buy America’’provisions, and data provided by the Federal Transit Administration regarding the use or request of waivers from such provisions; and(4) any recommendations as to whether such actions would result in a business line that makes

sense for the automobile manufacturer. [JUST WHAT, EXACTLY, QUALIFIES THE GOVERNMENT TO DO THIS AND WHY DOES THE GOVERNMENT THINK IT IS APPROPRIATE TO GO DOWN THIS PATH. I’M SURE THE COMPANIES WHO ALREADY MAKE THESE PRODUCTS WANT TO KNOW WHAT THE HECK THE GOVERNMENT IS UP TO]   

 

The Comptroller General of the United States shall review the analyses conducted under this section, and shall provide reports there on to the Congress and the President’s designee.

SEC. 15. REPORTING AND MONITORING.

(a) REPORTING ON CONSUMMATION OF LOANS

The President’s designee shall submit a report to the Congress on each bridge loan made under section 4 not later than 5 days after the date of the consummation of such loan.

 

The President’s designee shall submit a report to the Congress on the restructuring progress assessment measures established for each manufacturer under section 5(a) not later than 10 days after establishing the restructuring progress assessment measures.

(c) REPORTING ON EVALUATIONS

The President’s designee shall submit a report to the Congress containing the detailed findings and conclusions of the President’s designee in connection with the evaluation of an eligible automobile manufacturer under section 5(b). t 09 2002 10:55 Dec 10, 2008 Jkt 000000 PO 00000 Frm

(d) REPORTING ON CONSEQUENCES FOR FAILURE TO COMPLY.—The President’s designee shall submit a report to the Congress on the exercise of a right under section 11(f) to accelerate indebtedness of an eligible automobile manufacturer under this Act or to cancel any other financial assistance provided to such eligible automobile manufacturer, and the facts and circumstances on which such exercise was based, before the end of the 10-day period beginning on the date of the exercise of the right.

(e) MONITORING

The President’s designee shall monitor the use of loan funds received by eligible automobile manufacturers under this Act, and shall report to Congress once every 90 days (beginning 30 days after the date of enactment of this Act) on the progress of the ability of the recipient of the loan to continue operations and proceed with restructuring processes that restore the financial viability of the recipient and promote environmental sustainability. [Sound just like the requirements of the “TARP” – They call a meeting and the representatives come in and when they are asked – “Well, where has the taxpayor money been spent, which “toxic assets did you buy”, which “derivative contacts were purchased”, who received the taxpayors money? They answer, “we don’t know, and if we did, we couldn’t tell you!” And then Congress does nothing] 

SEC. 16. REPORT TO CONGRESS ON LACK OF PROGRESS TOWARD ACHIEVING AN ACCEPTABLE NEGOTIATED PLAN.

 

At any such time as the President’s designee determines that action is necessary to avoid disruption to the economy or to achieve a negotiated plan, the President’s designee shall submit to Congress a report outlining any additional powers and authorities necessary to facilitate the completion of a negotiated plan required under section 6. [Banruptcy Courts have all the power that is needed – Someone must have a plan to make a lot of bucks of this scam by avoiding the Bankrauptcy Courts]

(b) IMPEDIMENTS TO ACHIEVING NEGOTIATED PLANS

If the President’s designee determines, on the basis of an evaluation by the President’s designee of the progress being made by an eligible automobile manufacturer toward meeting the restructuring progress assessment measures established under section 5, that adequate progress is not being made toward achieving a negotiated plan by March 31, 2009, the President’s designee shall submit to Congress a report detailing the impediments to achievement of a negotiated plan by the eligible automobile manufacturer.

SEC. 17. SUBMISSION OF PLAN TO CONGRESS BY THE

PRESIDENT’S DESIGNEE.

 

[OR THROUGH BANKRUPTCY REORGANIZATION]

SEC. 18. GUARANTEE OF LEASES OF QUALIFIED TRANSPORTATION PROPERTY.

(a) GUARANTEE

Upon the request of a lessee of qualified transportation property, the President’s designee shall serve as a guarantor with respect to all obligations of such lessee with respect to leases of such qualified transportation property. Such guarantee shall be on such terms and conditions as are determined by the President’s designee, not later than 14 days after the date of enactment of this section. [This is in addition to Billions in cash]

 

(1) IN GENERAL.—Any claims under this section in excess of collateral held for the benefit of the President’s designee shall be paid from the General Fund of the Treasury out of funds not otherwise appropriated.

(2) RECOUPMENT FEE

Subsequent to any payment made under paragraph (1), the President’s designee shall recoup amounts paid under paragraph

(1) by establishing a fee that is sufficient to recoup the amount of the claim payment not later than 3 years after the date of such claim payment from any lessee or guarantor for whom the claim was paid or for whom a guarantee was issued.

(c) DEFINITIONS

For purposes of this section

(1) the term ‘‘qualified transportation property’’ means domestic property subject to a lease that was approved by the Federal Transit Administration prior to January 1, 2006; and (2) the term ‘‘guarantor’’ includes, without limitation, any guarantor, surety, and payment undertaker.

SEC. 19. COORDINATION WITH OTHER LAWS.

(a) IN GENERAL

No provision of this Act may be construed as altering, affecting, or superseding—

(1) the provisions of section 129 of division A of the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009, relating to funding for the manufacture of advanced tech

nology vehicles;

 

(b) LIMITATION

Except to provide bridge financing or to implement a restructuring plan pursuant to this Act, no funds from the United States Treasury may be used for the purpose of assisting an eligible automobile manufacturer to achieve financial viability or otherwise to avoid bankruptcy.

[AND WHAT DOES THAT MEAN]

(c) AUTHORIZATION OF FISCAL YEAR 2009 COST OF LIVING SALARY ADJUSTMENT FOR J

USTICES AND JUDGES

Pursuant to section 140 of Public Law 97–92,

(WHY CHOOSE THIS BILL TO ADD IN A PAY INCREASE FOR FEDERAL JUDGES) 

 

Code.NOW BACK TO THE AUTO BAILOUT

(1) IN GENERAL

Subject to paragraphs (2) and (4), the antitrust laws shall not apply to meetings, discussions, or consultations among an eligible automobile manufacturer and its interested parties for the purpose of achieving a negotiated plan pur

suant to section (6)(a)(2). 

Paragraph (1) shall not apply with respect to price-fixing, allocating a market between competitors, monopolizing (or attempt

ing to monopolize) a market, or boycotting. 

[HOW WILL ANYONE KNOW – THE MEETINGS HAVE BEEN EXEMPTED FROM “PUBLIC MEETINGS” REQUIREMENTS – ANYONE WANT TO BUY A SENATE SEAT WHILE WE ARE AT IT] 

 

The Attorney General of the United States and the Federal Trade Commission shall, to the extent practicable, receive reasonable advance notice of, and be permitted to participate in, each meeting, discussion, or consultation described in paragraph (1).

(4) PRESERVATION OF ENFORCEMENT AUTHORITY

Paragraph (1) shall not be construed to preclude the Attorney General of the United States or the Federal Trade Commission from bringing an enforcement action under the antitrust laws for injunctive relief. 

 

Paragraph (1) shall apply only with respect to meetings, discussions, or consultations that occur within the 3-year period beginning on the date of the enactment of this Act.

(6) DEFINITION.—For purposes of this subsection, the term ‘‘antitrust laws’’— 

SEC. 20. TREATMENT OF RESTRUCTURING FOR PURPOSESOF APPLYING LIMITATIONS ON NET OPERATING LOSS CARRYFORWARDS AND CERTAIN BUILT-IN LOSSES.

Section 382 of the Internal Revenue Code of 1986 shall not apply in the case of an ownership change resulting from this Act or pursuant to a restructuring plan ap

proved under this Act. 

 

Amounts provided by this Act are designated as an emergency requirement and necessary to meet emergency needs pursuant to section 204(a) of S. Con. Res. 21 (110th Congress), the concurrent resolution on the budget for fiscal year 2008.

http://www.house.gov/apps/list/press/financialsvcs_dem/autobill.pdferDate 0ct 09 2002 10:55 Dec 10, 2008 Jkt 000000 PO 00000 Frm 00037 Fmt 6652 Sfmt 6201 C:\TEMP\AUTO_006.XML HOLCPC

SEC. 21. EMERGENCY DESIGNATION.(A) has the same meaning as in subsection (a) of the first section of the Clayton Act (15) U.S.C. 12(a)), except that such term includes section 5 of the Federal Trade Commission Act (15 U.S.C. 45), to the extent that such section 5 applies to unfair methods of competition; and (B) includes any provision of State law that is similar to the laws referred to in subparagraph (A).(5) SUNSET

(3) ANTITRUST AGENCY PARTICIPATION(2) EXCLUSIONS(d) ANTITRUST PROVISIONSJustices and judges of the United States are authorized during fiscal year 2009 to receive a salary adjustment in accordance with section 461 of title 28, United States

(2) any existing authority to provide financial assistance or liquidity for purposes of the day-to-day operations in the ordinary course of business or research and development.(b) RECOUPMENT OF PAYMENT OF CLAIMSUpon submission of a report pursuant to section 16(b), the President’s designee shall The The Presidents Designee shall provide to Congress a plan that represents the judgement of the President’s designee as to the steps necessary to achieve the long-term viability, international competitiveness, and energy efficiency of the eligible automobile manufacturer, consistent with the factors set forth in section 6(b), including through a negotiated plan, a plan to be implemented legislation, or a reorganization pursuant to chapter 11 of title 11, United States Code. (a) AUTHORITY TO FACILITATE A NEGOTIATED PLAN.(b) REPORTING ON RESTRUCTURING PROGRESS ASSESSMENT MEASURES(b) GAO REVIEW AND REPORT(3) REPORTING

(e) ADDITIONAL TAXPAYER PROTECTIONS(A) SENIOR EXECUTIVE OFFICER(E) a prohibition on any compensation plan that would encourage manipulation of such automobile manufacturer’s reported earnings to enhance the compensation of any of its employees. [I JUST HATE WHEN THE CONGRESS SMIRKS AND LIES TO THE PUBLIC WITH “BILL LANGUAGE” LIKE THIS – THE CONGRESSPERSON WILL STAND IN FRONT OF THE CAMERAS AND SAY “WE ELIMINATED CEO BONUSES”, JUST LIKE WITH THE WALL STREET FIRMS – THEN THEY LET THEM COLLECT THE SAME BONUSES UNDER OTHER NAMES – SUPPLEMENTAL SALARY PAYMENTS, RETENTION PAYMENTS – WHILE THE FIRMS CLAIM “OH THAT WASN’T BAILOUT MONEY WE USED – AND CONGRESS DOES NOTHING – THIS LANGUAGE WON’T WORK ANY BETTER THAN THE “TARP” LANGUAGE DID](D) a prohibition on such automobile manufacturer paying or accruing any bonus or incentive compensation during the period that the loan is outstanding to the 25 most highly-compensated employees; and(C) a prohibition on such automobile manufacturer making any golden parachute payment to a senior executive officer during the period that the loan is outstanding;(B) a provision for the recovery by such automobile manufacturer of any bonus or incentive compensation paid to a senior executive officer based on statements of earnings, gains, or other criteria that are later found to be materally inaccurate;

THE PROPOSED AUTO BAILOUT BILL [With Analysis] Part 2

McAuleysworld – AUTO BAILOUT BILL  POST #2 – The actual Congressional Bill (with analysis):

 Auto Bailout Bill Continued:

 (a) PRIORITIZING ALLOCATION

The President’s designee shall prioritize allocation of the provision of financial assistance under this Act to any eligible automobile manufacturer, based on—

(1) the necessity of the financial assistance for the continued operation of the eligible automobile manufacturer;

(2) the potential impact of the failure of the eligible automobile manufacturer on the United States economy; and

(3) the ability to utilize the financial assistance optimally to satisfy the operational and long-term restructuring requirements of the eligible automobile manufacturer.

[This is exactly what Bankruptcy Courts do every day – except the Bankruptcy Courts don’t hand out taxpayor money]

(b) ORDER OF PRIORITY; SECTION 4.

For purposes of allocating bridge loans or commitments pursuant to section 4, the President’s designee shall prioritize the considerations set forth in subsection (a) in the following order: paragraph (1), paragraph (2), and paragraph (3).

(c) ORDER OF PRIORITY; SECTION

For purposes of allocating financial assistance for restructuring pursuant to section 7, the President’s designee shall prioritize the considerations set forth in subsection (a) in the following order: paragraph (3), paragraph (2), and paragraph (1).

SEC. 10. FUNDING.

 (a) FINANCIAL ASSISTANCE.

 (1) IN GENERAL

Such sums are appropriated as are necessary for the purpose of providing funds to support up to $14,000,000,000 in loans under this Act. The Secretary of Energy shall make available to the President’s designee $7,010,000,000 of funds made available under section 129 of division A of the Consolidated Security, Disaster Assistance and Continuing Appropriations Act, 2009, relating to funding for the manufacture of advanced technology vehicles, which shall reduce the appropriation under this paragraph.

(2) RESERVATION FOR CERTAIN PURPOSES

The Secretary of Energy shall reserve $500,000,000 of the amounts made available under paragraph (1) for purposes of section 136 of the Energy Independence and Security Act of 2007 (Public Law 110-140; 42 U.S.C. 17013).

(3) CONTINUING APPLICATION PROCESS

No provision of this section shall be construed as prohibiting or limiting the Secretary of Energy from processing applications for loans under section 136 of the Energy Independence and Security Act of 2007.

 (b) AUTHORIZATION.—There are authorized to be appropriated to the Secretary of Energy, sums as may be necessary for the purpose of replenishing the funds made available to the President’s designee under subsection (a)(1).

available to the President’s designee under subsection a)(1).

SEC. 11. TERMS AND CONDITIONS.

(a) DURATION

The duration of any loan made under this Act shall be 7 years, or such longer period as the President’s designee may determine with respect to such loan. [A loan of unlimited duration? No time limit – competely open ended] 

(b) RATE OF INTEREST; TIMING OF PAYMENTS

 (1) RATE OF INTEREST

The annual rate of interest for a loan under this Act shall be— (A) 5 percent during the 5-year period beginning on the date on which the President’s designee disburses the loan; and (B) 9 percent after the end of the period described in subparagraph (A). [Are they kidding – they will give Taxpayor money out at this interest rate – when the American Taxpayor can’t get loans at this rate. You want to fix the property market – lower mortgage rates to 5% and see what happens – Why won’t the Professional lenders loan money to the “Detroit 3″ at this rate]

2) TIMING OF PAYMENTS.—Payments of interest on loans under this Act shall be made semiannually.

(c) NO PREPAYMENT PENALTY

 A loan made under this Act shall be prepayable without penalty at any time.

(d) INFORMATION ACCESS

 As a condition for the receipt of any financial assistance made under this Act, an eligible automobile manufacturer shall agree—

(1) to allow the President’s designee to examine any books, papers, records, or other data of the eligible automobile manufacturer, and those of any subsidiary, affiliate, or entity holding an ownership interest of 50 percent or more of such automobile manufacturer, that may be relevant to the financial assistance, including compliance with the terms of a loan or any conditions imposed under this Act; and

(2) to provide in a timely manner any information requested by the President’s designee, including requiring any officer or employee of the eligible automobile manufacturer, any subsidiary, affiliate, or entity referred to in paragraph (1) with respect to such manufacturer, or any person having possession, custody, or care of the reports and records required under paragraph (1), to appear before the President’s designee at a time and place requested and to provide such books, papers, records, or other data, as requested, as may be relevant or material.

(e) OVERSIGHT OF TRANSACTIONS AND FINANCIAL

[But where is the concern about “transparency” to keep the public informed about how their money is being spent – Why are public meeting requirements being waived?]

(1) DUTY TO INFORM

During the period in which any loan extended under this Act remains outstanding, the eligible automobile manufacturer who received such loan shall promptly inform the President’s designee of

(A) any asset sale, investment, contract, commitment, or other transaction proposed to be entered into by such eligible automobile manufacturer that has a value in excess of $100,000,000; and (B) any other material change in the financial condition of such eligible automobile manufacturer.

 (2) AUTHORITY OF THE PRESIDENTS DESIGNEE

During the period in which any loan extended under this Act remains outstanding, the

President’s designee may (A) review any asset sale, investment, contract, commitment, or other transaction described in paragraph (1); and (B) prohibit the eligible automobile manufacturer which received the loan from consummating any such proposed sale, investment, contract, commitment, or other transaction, if the President’s designee determines that consummation of such transaction would be inconsistent with or detrimental to the long-term viability of the eligible automobile manufacturer.

 (3) PROCEDURES

 The President’s designee may establish procedures for conducting any review under this subsection.

(f) CONSEQUENCES FOR FAILURE TO COMPLY

 The terms of any financial assistance made under this Act shall provide that if—

(1) an evaluation by the President’s designee under section 5(b) demonstrates that the eligible automobile manufacturer which received the financial assistance has failed to make adequate progress towards meeting the restructuring progress assessment measures established by the President’s designee under section 5(a) with respect to such recipient;

[AND WHAT IS THE PENALTY FOR COMING BACK TO WASHINGTON WITHOUT A “RESCUE PLAN” – WILL CONGRESS HAND OUT TAXPAYOR MONEY BEFORE THE “DETROIT 3″ SUBMITS A SURVIVAL PLAN?]

(2) after March 31, 2009, the eligible aumobile manufacturer which received the financial assistance fails to submit an acceptable restructuring plan under section 6(b), or fails to comply with any conditions or requirement applicable under this Act or applicable fuel efficiency and emissions requirements; or (3) after a restructuring plan of an eligible automobile manufacturer has been approved by the President’s designee, the auto manufacturer fails to make adequate progress in the implementation of the plan, as determined by the President’s designee, the repayment of any loan may be accelerated to such earlier date or dates as the President’s designee may determine and any other financial assistance may be cancelled by the President’s designee.

[AND EXACTLY WHERE DOES CONGRESS THINK THE MONEY WILL COME FROM – THE MONEY TO REPAY THE TAXPAYOR – THE “DETROIT 3″ WILL BE SPENDING THE BAILOUT MONEY AS FAST AS IT COMES IN THE DOOR – ONCE IT IS SPENT IT IS GONE] 

SEC. 12. TAXPAYER PROTECTION.

(a) WARRANTS

 (1) IN GENERAL

The President’s designee may not provide any loan under this Act, unless the President’s designee, or such department or agency as is designated for such purpose by the President, receives from the eligible automobile manufacturer

(A) in the case of an eligible automobile manufacturer, the securities of which are traded on a national securities exchange, a warrant giving the right to the President’s designee to receive nonvoting common stock or preferred stock in such eligible automobile manufacturer, or voting stock, with respect to which the President’s designee agrees not to exercise voting power, as the President’s designee determines appropriate; or

(B) in the case of an eligible automobile manufacturer other than one described in sub-paragraph (A), a warrant for common or preferred stock, or an instrument that is the economic equivalent of such a warrant in the holding company of the eligible automobile manufacturer, or any company that controls a majority stake in the eligible automobile manufacturer, as determined by the President’s designee.

(2) AMOUNT

[I find this insulting – insulting to my intelligence – if The “Detroit 3″ doesn’t successfully restructure – none of the “financial ijntruments” listed above will be worth a damn when the “Detroit 3″ – Taxpayors would never be repaid – and the individuals who drafted this Bill know that full well]

(A) IN GENERAL.—The warrants or instruments described in paragraph (1) shall have a value equal to 20 percent of the aggregate amount of all loans provided to the eligible automobile manufacturer under this Act. Such warrants or instruments shall entitle the Government to purchase  (i) nonvoting common stock, up to a maximum amount of 20 percent of the issued and outstanding common stock of (I) the eligible automobile manufacturer; or (II) in the case of an eligible automobile manufacturer, the securities of which are not traded on a national securities exchange, a holding company or company that controls a majority of the stock thereof (in this section referred to as the ‘‘warrant common’’); and (ii) preferred stock having an aggregate liquidation preference equal to 20 percent of such aggregate loan amount, less the value of common stock available for purchase under the warrant common (in this section referred to as the ‘‘warrant preferred’’).

(B) COMMON STOCK WARRANT PRICE

The exercise price on a warrant or instrume described in paragraph (1) shall be—

(i) the 15-day moving average, as of December 2, 2008, of the market price of the common stock of the eligible auto mobile manufacturer which received any loan under this Act; or

(ii) in the case of an eligible auto mobile manufacturer, the securities of which are not traded on a national securities exchange, the economic equivalent of the market price described in clause (i), a determined by the President’s designee.

 (C) TERMS OF PREFERRED STOCK WARRANT

 (i) IN GENERAL

The initial exercise price for the preferred stock warrant shall be $0.01 per share or such greater amount as the corporate charter may require as the par value per share of the warrant preferred. The Government shall have the right to immediately exercise the warrants.

(ii) REDEMPTION.—The warrant preferred may be redeemed at any time after exercise of the preferred stock warrant at 100 percent of its issue price, plus any accrued and unpaid dividends.

 (iii) OTHER TERMS AND CONDITIONS

 Other terms and conditions of the warrant preferred shall be determined by the President’s designee to protect the interests of taxpayers.

[Warrants , Stocks and Notes issued by a Company that goes out of Business are worthless and the Taxpayors will not be repaid] 

(3) APPLICATION OF OTHER PROVISIONS OF LAW

Except as otherwise provided in this section, the requirements for the purchase of warrants under section 113(d)(2) of the Emergency Economic Stabilization Act of 2008 (division A of Public Law 110 – 343 shall apply to any warrant or instrument described in paragraph (1), including the antidilution protection provisions therein.

http://www.house.gov/apps/list/press/financialsvcs_dem/autobill.pdf

PART ONE OF BAILOUT BILL HERE:  http://mcauleysworld.wordpress.com/2008/12/11/the-proposed-auto-bailout-bill-with-analysis-part-1/

PART THREE OF BAILOUT BILL HERE:Ththttp://mcauleysworld.wordpress.com/2008/12/11/the-proposed-auto-bailout-bill-with-analysis-part-3/tp://mcauleysworld.wordpress.com/2008/12/11/the-proposed-auto-bailout-bill-with-analysis-part-3/

http://mcauleysworld.wordpress.com/2008/12/11/the-proposed-auto-bailout-bill-with-analysis-part-3/2 10:55 Dec 10, 2008 Jkt 000000 PO 00000 Frm 00020 Fmt 6652 Sfmt 6201 C:\TEMP\AUTO_006.XML HOLCPC

THE PROPOSED AUTO BAILOUT BILL [With Analysis] Part 1

THE ACTUAL AUTO BAILOUT BILL

To authorize financial assistance to eligible automobile manufacturers, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

Mr. Frank

of Massachusetts introduced the following bill; which was referred to the Committee on

 

A BILL

To authorize financial assistance to eligible automobile manufacturers, and for other purposes. [This bill only addresses 1/2 the US Auto Industry – The “Old” half]

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.(a) SHORT TITLE

 

 This Act may be cited as the

‘‘Auto Industry Financing and Restructuring Act’’.

(b) TABLE OF CONTENTS

The table of contents for this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings and purposes.

Sec. 3. Presidential designation.

Sec. 4. Bridge financing.

 Sec. 5. Restructuring progress assessment.

 Sec. 6. Submission of plans.

 

Sec. 7. Financing for restructuring.

Sec. 8. Disapproval and call of loan.

Sec. 9. Allocation.

Sec. 10. Funding.

Sec. 11. Terms and conditions.

Sec. 12. Taxpayer protection.

Sec. 13. Oversight and audits.

Sec. 14. Automobile manufacturers’ study on potential manufacturing of transit vehicles.

Sec. 15. Reporting and monitoring.

Sec. 16. Report to Congress on lack of progress toward achieving an acceptable negotiated plan.

Sec. 17. Submission of plan to Congress by the President’s designee.

Sec. 18. Guarantee of leases of qualified transportation property.

Sec. 19. Coordination with other laws.

Sec. 20. Treatment of restructuring for purposes of applying limitations on net

operating loss carryforwards and certain built-in losses.

Sec. 21. Emergency designation.

 SEC. 2. FINDINGS AND PURPOSES.

(a) FINDINGS

The Congress finds the following: [So to vote for the Bill, you need to agree with these findings?]

(1) A combination of factors, including errors in the business model of domestic automobile manufacturers, and emergency economic circumstances, has prevented the domestic automobile industry from securing credit from other sources, and has led to

[and the Detroit 3’s loss of over a 150 billion dollars over the past 5 years has prevented banks and investors from loaning money to the Detroit 3 – If it is a bad bet for Professional Investors – isn’t it a bad bet for taxpayers] 

the possibility of the failure of the domestic auto[If they say they will go out of business by month end – haven’t they already failed] mobile industry, which failure would have a systemic adverse effect on the economy. [Won’t throwing 100’s of billions of dollars of taxpayer money away on a failing set of businesses have an adverse effect on the Country]

 (2) Therefore, action in the form of financial aid to the domestic automobile industry is necessary to stabilize the economy. [Auto

[How does throwing good money after bad stabilize the economy? It doesn’t!] 

 (b) PURPOSES

 The purpose of this ACT are

 

 (1) to immediately provide authority and facilities(C) preserves and promotes the jobs of American workers employed directly by the domestic automobile industry and in related industries; [Every expert that testified before Congress and every Ceo to testify before Congress stated that “additional employment cuts” and “plant closings” would be necessary as part of the “restructuring” necessary to make the Detroit 3″ competitive – why isn’t this mentioned]

 (A) results in a viable and competitive domestic automobile industry that minimizes adverse effects on the environment [I’m relieved that we will worry about the environment before wwe worry about the taxpayor];

 (2) to ensure that such authority and such facilities are used in a manner that—ties to restore liquidity and stability to the domestic automobile industry in the United States; and(B) enhances the ability and the capacity of the domestic automobile industry to pursue  the timely and aggressive production of energy efficient advanced technology vehicles;

(D) safeguards the ability of the domestic automobile industry to provide retirement and health care benefits for the industry’s retirees and their dependents;  [these are the exact “costs” that the UAW needs to make concessions on – why does the bill imply they will not be changed? – Even the GM CEO stated that GM currently has 4 retires for every “active worker” – after the projected job cuts in 2009 GM will have 6 retires for every active worker – Are the US taxpayers to pay for the benefits that GM and the UAW c an’t afford?]

 The President shall designate 1 or more officers from the Executive Branch having appropriate expertise in such areas as economic stabilization, financial aid to commerce and industry, financial restructuring, energy efficiency, and environmental protection (who shall hereinafter in this Act be collectively referred to as the ‘‘President’s designee’’) to carry out the purposes of this Act, including the facilitation of restructuring necessary to achieve the long-term financial viability of domestic automobile manufacturers, who shall serve at the pleasure of the President. [1). Will this Expert be like the “Trobled Asset Relief” Expert, who less than a month after the “TARP” was passed stopped buying “troubled assets” but continues spending taxpayor dollars however he pleases – with no transparency or accountability. 2). “At the pleasure of the President” – What? So the next President can appoint the UAW President to loot the US Treasury and Congress will have no say!]   

(E) stimulates manufacturing and sales of automobiles produced by automobile manufacturers in the United States. [They really mean “less than 1/2 of the autos produced in the US – the “New Auto Industry” isn’t included in this “handout” – some “autos” are considered “American” when the parts are made in Mexico and the cars are assembled in Canada] 

 

(b) ADDITIONAL PERSONS

The President or the President’s designee may also employ, appoint, or contract with additional persons having such expertise as the President or the President’s designee believes will assist the Government in carrying out the purposes of this Act. [Great, a whole new bureaucracy, paid for by taxpayor dollars, when there is already a system in place to do this – THE BANKRUPTCY COURTS – the Taxpayors are already fiunding the Bankruptcy Courts – why create additional expenses for the taxpayors. Does this Congress plan on giving every ailing industry their own “CZAR” so they can go through bankruptcy without calling it Bankruptcy].

(c) PARTICIPATION BY OTHER AGENCY PERSONNEL

Other Federal agencies may provide, at the request of the President’s designee, staff on detail from such agencies for purposes of carrying out this Act.

SEC. 4. BRIDGE FINANCING.

(a) IN GENERAL.—The President’s designee shall authorize and direct the disbursement of bridge loans or [without a restructing plan to make the “Detroit 3″ competitive these are “bridge loans to nowhere”] enter into commitments for lines of credit to each autumobile manufacturer that submitted a plan to Congress on December 2, 2008 [WAIT ONE MINUTE – THERE WERE NO “PLANS SUBMITTED” on December 2, 2008. The Detroit 3 were given until the end of March 2009 to submit plans] (hereafter in this Act referred to as an ‘‘eligible automobile manufacturer’’ [So only 1/2 of the US Auto Industry is eligible]), and has submitted a request for such loan or commitment.

(b) AVAILABILITY OF FUNDS

All funds that are available pursuant to section 10 to provide bridge financing or commitments for lines of credit to eligible automobile manufacturers, after taking into account the reservation of funds under section 10(a)(2), shall be used for the purposes described in section 10(a). No new funds shall be available to any eligible automobile manufacturer for the purposes of this section after the date on which the President’s designee has approved restructuring plan under section 6 for such eligible automobile manufacturer. [So this funding could go on forever – there is no specific “stop date” – it is all left to the “CAR CZAR”]

(c) AMOUNT OF ASSISTANCE.—The President’s designee shall authorize bridge loans or commitments for lines of credit to each eligible automobile manufacturer in an amount that is intended to facilitate the continued operations of the eligible automobile manufacturer and to prevent the failure of the eligible automobile manufacturer, consistent with the plan submitted on December 2, 2008, and subject to available funds. [WAIT ONE MINUTE – There were no plans subitted on December 2, as was required – so now we are expected to fund loans while “the plans” are being developed! There has been no change in how they do business – no consessions from the Unions or suppliers, they haven’t identified which new plants will be closed – heck, they haven’t even shut down the “JOB BANKS” or “Full Pay for No Work” programs – enough of the talk, lets see some action]   

(d) ALLOCATION.—The President’s designee shall authorize the disbursements or commitments under this section in accordance with the allocation priorities set forth in subsections (a) and (b) of section 9.

 (a) ESTABLISHMENT OF MEASURES FOR ASSESSINGPROGRESS.—Not later than January 1, 2009, the President’s designee shall determine appropriate measures for assessing the progress of each eligible automobile manufacturer toward transforming the plan submitted by such manufacturer to the 

Congress on December 2, 2008, into the restructuring plan to be submitted under 6(b). to [Read that last paragraph carefully, it is the admission that the “restructuring plans” previously requested by Congress, were, in fact, not submitted on December 2, 2008) 

(b) EVALUATION OF PROGRESS ON BASIS OF RESTRUCTURING PROGRESS ASSESSMENT MEASURES

 (1) IN GENERAL

 

The President’s designee shall evaluate the progress of each eligible automobile manufacturer toward the development of a restructuring plan, on the basis of the restructuring progress assessment measures established under this section for such manufacturer. [What? Are they creating a new set of standards or are the standards used in other “bankruptcies” going to be applied]

(2) TIMING

Each evaluation required under paragraph (1) for any eligible automobile manufacturer shall be conducted at the end of the 45-day period beginning on the date on which the restructuring progress assessment measures were established by the President’s designee for such eligible automobile manufacturer. [THIS SURE REMINDS ME OF THE “TARP” or ‘Troubled Assets Relief Program. 1st, no one has submitted a restructuring plan, 2nd no one has defined how to measure if the plan is working – These issues have already been identified and defined – BY THE BANKRUPTCY COURTS – Why not use what is tried, tested and proven? Remeber, “TARP” authorized 700 Billion, however, the Government has extended 7 Trillion, or 10 times the approved amount, in just 2 months]   

SEC. 6. SUBMISSION OF PLANS.

(a) NEGOTIATED PLANS

(1) FACILITATION

(A) IN GENERAL

Beginning on the date of the enactment of this Act, the President’s designee shall seek to facilitate agreement on any restructuring plan to achieve and sustain the long-term viability, international competitiveness, and energy efficiency of an eligible automobile manufacturer, negotiated and agreed to by representatives of interested parties (in this Act referred to as a ‘‘negotiated plan’’) with respect to any eligible automobile manufacturer. [What? This is exactly what a “Bankruptcy does – with one major difference – In Bankrutcy – Taxpayor funded loans are not required – ZERO TAX PAYOR DOLLARS ARE PLACED AT RISK].

(B) INTERESTED PARTIES

For purposes of this section, the term ‘‘interested party’’ shall be construed broadly so as to include all persons who have a direct financial interest in a particular automobile manufacturer, including—

(i) employees and retirees of the eligible automobile manufacturer;

(ii) trade unions;

 

(iii) creditors;

(iv) suppliers;

(v) automobile dealers; and

 

(vi) shareholders.

[Obviously, a single person, THE CAR CZAR, can’t do this alone. So how many thousands of people will he hired and at what costs? Who will decide who gets hired and why? This is so much like the failed “TARP Plan” it is unbelievable. Why is it the “Detroit 3″ can’t file for Bankruptcy Reorganization like every other business? Hasn’t Congress learned anything from TARP? The “TARP” hasn’t even finished setting up its “conflict of interests” protocols. protocols nexessary to make sure people are not just stealing taxpayor dollars]

A) ACTIONS OF THE PRESIDENTS DESIGNEE

(A) IN GENERAL

The purpose of achieving a negotiated plan, the President’s designee may convene, chair, and conduct formal and informal meetings, discussions, and consultations, as appropriate, with interested parties of an eligible automobile manufacturer. [Does this section eliminate the application of “Open Meetings Laws” – Does this section allow “closed doors” meetings?]

(B) CLARIFICATION.—The Federal Advisory Committee Act shall not apply with respect to any of the activities conducted or taken by the President’s designee pursuant to this Act.

 [Just what we need today – less Government transparency – So the public can’t track how its Tax Dollars are being spent. Let the “Detroit 3″ use the existing “Bankruptcy Procedures where all transactions are an “open book”] 

(b) RESTRUCTURING PLAN

Not later than March 31, 2009, each eligible automobile manufacturer shall submit to the President’s designee a restructuring plan to achieve and sustain the long-term viability, international competitiveness, and energy efficiency of the eligible automobile manufacturer (in this Act referred to as the ‘‘restructuring plan’’) in accordance with this section. [I get it now – the Plans that were to be submitted on Deecmber 2, 2008 – have not been submitted – so we are going to give them the money anyway and beg them to get the plans turned in by March 31, 2009. I hope the put their dogs in the basement- I’d hate to hear that “the dog eat my plan” in March and have to give the “Detroit 3″ another 90 days and Billions of additional dollars] The President’s designee shall approve the restructuring plan if the President’s designee determines that the plan will result in—

 

(1) the repayment of all Government-provided financing, consistent with the terms specified in section 11, or otherwise agreed to;

(2) the ability—

(A) to comply with applicable fuel efficiency and emissions requirements;

(B) to commence domestic manufacturing of advanced technology vehicles, as described in

section 136 of the Energy Independence and Security Act of 2007 (Public Law 110–140; 42

U.S.C. 17013); and

(C) to produce new and existing products and capacity, as described in section 14;

[Is a “Bailout Bill” the appropriate place to address “fuel” issues – I wish Congress, with its past track record, would just try to get one problem addressed at a time] 

(3) the achievement of a positive net present value, using reasonable assumptions and taking into account all existing and projected future costs, including repayment of any financial assistance provided pursuant to this Act; [This is what a Bankruptcy Court does – except, there would be NO taxpayor funds to repay]

(4) efforts to rationalize costs, capitalization, and capacity with respect to the manufacturing workforce, suppliers, and dealerships of the eligible automobile manufacturer;

(5) proposals to restructure existing debt, including, where appropriate, the conversion of debt to equity, to improve the ability of the eligible aumobile manufacturer to raise private capital; and

(6) a product mix and cost structure that is competitive in the United States marketplace.

 

SEC. 7. FINANCING FOR RESTRUCTURING.

 

Upon approval by the President’s designee of a restructuring plan, the President’s designee may provide financial assistance to an eligible automobile manufacturer to implement the restructuring plan.

SEC. 8. DISAPPROVAL AND CALL OF LOAN.

If the President’s designee has not approved the restructuring plan at the expiration of the period provided in section 6 for submission and approval of the restructuring plan, the President’s designee shall call the loan or cancel the commitment within 30 days, unless a restructuring plan is approved within that period. [Let me get this straight. The “Detroit 3″ was told to “go home” and draw up “restructing plans” that would specifically identify how they would change the way the do busioness and adopt “new business models” that would allow them to survive and prosper in the future, and then – AFTER THE PLANS WERE DEVELOPED – to come back and ask Congress for money to help implement the “new plans”  – Obviously, the “Detroit 3″ has not done what was required of them – This proposed “Act” hands out the money before the “Detroit 3″ offers any specific proposals – There has been no substantive changes by the Detroit 3 since the last time they went to Washington to ask for this money. Please direct the “Detroit 3″ to the Bankruptcy Court down the street.]

The full Congressional copy of the Bill can be viewed here: http://www.house.gov/apps/list/press/financialsvcs_dem/autobill.pdf

THE PROPOSED AUTO BAILOUT BILL [With Analysis] Part 2 – Here:  http://mcauleysworld.wordpress.com/2008/12/11/the-proposed-auto-bailout-bill-with-analysis-part-2/

CAR CZAR vs BANKRUPTCY REORGANIZATION – Which is best for “Detroit 3″

“If We Don’t Say Bankrupt” no one will notice the Detroit 3 are broke

I guess it isn’t so anymore ….. maybe the public has grown accustomed to being lied to …. or have we, the public,  just lost all of our common sense …….

The latest lie …… “Oh we can’t ask the “Detroit 3″ to file for Bankruptcy Reorganization, like any other Company or person ….” 

The reason – “No one would buy a car from a “bankrupt company”.

When I was young, a lie of this magnitude would have been called a “whopper” ……

At this point in time their are very few people who do not know the “Detroit 3″ are broke – they are in fact “Bankrupt” in every business sense – that is why they are seeking a “handout” of taxpayer money …….. The “Detroit 3″ owe 10’s of Billions of Dollars they can’t pay …. that is why they want a handout ……

Anyone who is unaware of the fact that the “Detroit 3″ are broke … will probably not notice if the “Detroit 3″ actually file for an official “bankruptcy”. As for the public’s willingness to buy cars from a “bankrupt car company”, I just don’t buy the argument – A funiture store near when I live has been holding “Going out of Business” sales  for 12 years now – the furniture store will pay your sales tax and you won’t pay interest on your purchase for 5 years …… I guess the store may be “going out of business” they are just doing it very slowly.

The American public understands “Bankruptcy Reorganization”. ”Bankruptcy Reorganization” does not mean “going out of business”.

Lets touch on some facts, BANKRUPTCY means that a company does not have the “means” or “money” to meet its financial obligations. If the Detroit 3 could meet their financial obligations (as Ford Motor Co might be able to do) there would be no “pressing argument” to support a “handout” of taxpayer moneys, there would be no need to give the “Detroit 3″ any money at all.

Pretending this is not the case should not “fool” anyone. Reporters, Politicians and the “Detroit 3″ are hoping it will fool the American taxpayor.  

There are 2 Types of Bankruptcy.  The first is Chapter 11 – which proivides a company the opportunity to “reorganize” its operations and continue on in business. The Second, Chapter 7, involves a liquidation or “sell off” of Company assests and the end of the business.  http://encyclopedia.thefreedictionary.com/Chapter+11 

Chapter 11 provides a Company a “fresh start”.  

Definition

When a troubled business is unable to service its debt or pay its creditors, the company or its creditors can file with a federal bankruptcy court for protection under either chapter 7 or chapter 11. In chapter 7, the business ceases operations and a trustee sells all of its assets and distributes the proceeds to its creditors. This is done in accordance with statutory defined priorities.   http://encyclopedia.thefreedictionary.com/Chapter+11

A chapter 11 filing, on the other hand, is usually an attempt to stay in business while a bankruptcy court supervises the “reorganization” of the company’s contractual and debt obligations. The court can grant complete or partial relief from most of the company’s debts and its contracts, so that the company can make a fresh start. Often, if the company’s debts exceed its assets, then at the completion of bankruptcy the company’s owners (stockholders) all end up with nothing; all their rights and interests are terminated and the company’s creditors end up with ownership of the newly reorganized company.     http://encyclopedia.thefreedictionary.com/Chapter+11

Rationale

In enacting chapter 11 of the Bankruptcy code, Congress concluded that it is often the case that the value of a business is greater if sold or reorganized as a going concern than the value of the sum of its parts if the business’s assets were to be sold off individually. It follows that it may be more economically efficient to allow a troubled company to continue running, cancel some of its debts, and give ownership of the newly reorganized company to the creditors whose debts were canceled. Alternatively, the business can be sold as a going concern with the net proceeds of the sale distributed to creditors ratably in accordance with statutory priorities. In this way, jobs may be saved, the engine of profitability which is the business is maintained rather than being dismantled, and, as a proponent of a chapter 11 plan is required to demonstrate as a precursor to plan confirmation, the business’s creditors end up with more money than they would in a chapter 7 liquidation. http://encyclopedia.thefreedictionary.com/Chapter+11

Details

All creditors are entitled to be heard by the court which is responsible for determining whether the plan of reorganization complies with the purposes of the bankruptcy law and provides for fair and equitable treatment of all parties in interest. http://encyclopedia.thefreedictionary.com/Chapter+11

Some contracts, known as executory contracts, may be rejected if canceling them would be financially favorable to the company and its creditors. Such contracts include labor union contracts, supply or operating contracts (with both vendors and customers) and real estate leases. The standard feature of executory contracts is that each party to the contract has duties remaining under the contract. In the event of a rejection, the remaining parties to the contract become unsecured creditors of the debtor. http://encyclopedia.thefreedictionary.com/Chapter+11

Chapter 11 is reorganization, as opposed to liquidation. Debtors may “emerge” from a chapter 11 bankruptcy within a few months or within several years, depending on the size and complexity of the bankruptcy. Debtors in Chapter 11 have the exclusive right to propose a plan of reorganization for a period of time. After that time has elapsed, creditors may also propose plans. Plans must satisfy a number of criteria in order to be “confirmed” by the bankruptcy court. Among other things, creditors must vote to approve the plan of reorganization. If a plan cannot be confirmed the court may either convert the case to a liquidation under Chapter 7 or, if in the best interests of the creditors and the estate, the case may be dismissed resulting in a return to the status quo before bankruptcy. If the case is dismissed, creditors will look to nonbankruptcy law in order to satisfy their claims. http://encyclopedia.thefreedictionary.com/Chapter+11 

Criticism

Some critics have claimed that Chapter 11 bankruptcy is excessively lenient in giving a needless “escape hatch” to the incompetent management of a failing company, damaging the efficiency of the economy as a whole and allowing poor managers to continue managing. It is unusual for the management of a company in Chapter 11 to be fired, as it is usually assumed that the present management team knows far more about the company and its customers than would a new set of management. [Bankruptcy laws do not prohibit the firing of Management] These critics note that in Europe, bankruptcy law is far less lenient for failing companies. 
http://encyclopedia.thefreedictionary.com/Chapter+11

Whether you call it BANKRUPTCY or not, the “Detroit 3″ are broke and are, in fact, BANKRUPT. 

A “Bailout” or “Handout” doesn’t guarantee the “Detroit 3″ will stay in business, it will simply delay the day of reckoning. THE KEY TO THE SURVIVAL OF THE “DETROIT 3″ IS THEIR SUCCESSFUL REORGANIZATION

Bankruptcy Reoraginzation doesn’t guarantee the survival of the “Detroit 3″ either – but “Bankruptcy Reoragnization” doesn’t gamble  Billions in taxpayor dollars either. Bankruptcy would provide the “Detroit 3″ with a “fresh start”, a “Bailout” just throws money at an “old problem”.

A “Car Czar” is not the answer – A “Czar” will just add layers of beauracracy over the true problems  

Definition: bu·reauc·ra·cy, n. pl. bu·reauc·ra·cies,   1. a). Administration of a government chiefly through bureaus or departments staffed with nonelected officials., 2. a). Management or administration marked by hierarchical authority among numerous offices and by fixed procedures: b). The administrative structure of a large or complex organization:3). An administrative system in which the need or inclination to follow rigid or complex procedures impedes effective action. http://www.thefreedictionary.com/bureaucracy

 The answer to how the ”Detroit 3″ should address their problems  is simple, straightforward, tried and tested ….. seeking other alternatives is just political posturing while individuals pursue “secret agendas” behind the scenes.

I guess that is what we call politics today -

The Politicians and Press who say otherwise are telling you another “whopper”.

THE AMERICAN PUBLIC DOES NOT NEED ANOTHER VERSION OF THE TROUBLED ASSET RELIEF  WHERE

a) Troubled Assets are not purchased

b) There is no transparency – the Government won’t even dilvulge what was purchased

c) An “Executive Oversite Committee” was to be appointed – Not a single appointment has been made todate. 

CONTACT YOUR CONGRESSPERSON – TELL THEM TO VOTE NO ON A BAILOUT AND SAY YES

TO A “FRESH START” FOR THE “DETROIT 3″.

CONTACT YOUR CONGRESSPERSON HERE:

http://www.usa.gov/Contact/Elected.shtml

                                                                                                                           

“If We Don’t Say Bankrupt” no one will notice the Detroit 3 are broke

There was a time when Poiticians and Reporters took great care not to insult the intelligence of the American Public – Getting caught insulting the collective intellgence of the people was a “fatal blow” to their careers. A Newsreporter or Politican’s career would be over if they were caught in an obvious lie to the public. 

I guess it isn’t so anymore ….. maybe the public has grown accustomed to being lied to …. or have we, the public,  just lost all of our common sense …….

The latest lie …… “Oh we can’t ask the “Detroit 3″ to file for Bankruptcy Reorganization, like any other Company or person ….” 

The reason – “No one would buy a car from a “bankrupt company”.

When I was young, a lie of this magnitude would have been called a “whopper” ……

At this point in time their are very few people who do not know the “Detroit 3″ are broke – they are in fact “Bankrupt” in every business sense – that is why they are seeking a “handout” of taxpayer money …….. The “Detroit 3″ owe 10’s of Billions of Dollars they can’t pay …. that is why they want a handout ……

Anyone who is unaware of the fact that the “Detroit 3″ are broke … will probably not notice if the “Detroit 3″ actually file for an official “bankruptcy”. As for the public’s willingness to buy cars from a “bankrupt car company”, I just don’t buy the argument – A funiture store near when I live has been holding “Going out of Business” sales  for 12 years now – the furniture store will pay your sales tax and you won’t pay interest on your purchase for 5 years …… I guess the store may be “going out of business” they are just doing it very slowly.

The American public understands “Bankruptcy Reorganization”. “Bankruptcy Reorganization” does not mean “going out of business”.

Lets touch on some facts, BANKRUPTCY means that a company does not have the “means” or “money” to meet its financial obligations. If the Detroit 3 could meet their financial obligations (as Ford Motor Co might be able to do) there would be no “pressing argument” to support a “handout” of taxpayer moneys, there would be no need to give the “Detroit 3″ any money at all.

Pretending this is not the case should not “fool” anyone. Reporters, Politicians and the “Detroit 3″ are hoping it will fool the American taxpayor.  

There are 2 Types of Bankruptcy.  The first is Chapter 11 – which proivides a company the opportunity to “reorganize” its operations and continue on in business. The Second, Chapter 7, involves a liquidation or “sell off” of Company assests and the end of the business.  http://encyclopedia.thefreedictionary.com/Chapter+11 

Chapter 11 provides a Company a “fresh start”.  

Definition

When a troubled business is unable to service its debt or pay its creditors, the company or its creditors can file with a federal bankruptcy court for protection under either chapter 7 or chapter 11. In chapter 7, the business ceases operations and a trustee sells all of its assets and distributes the proceeds to its creditors. This is done in accordance with statutory defined priorities.   http://encyclopedia.thefreedictionary.com/Chapter+11

A chapter 11 filing, on the other hand, is usually an attempt to stay in business while a bankruptcy court supervises the “reorganization” of the company’s contractual and debt obligations. The court can grant complete or partial relief from most of the company’s debts and its contracts, so that the company can make a fresh start. Often, if the company’s debts exceed its assets, then at the completion of bankruptcy the company’s owners (stockholders) all end up with nothing; all their rights and interests are terminated and the company’s creditors end up with ownership of the newly reorganized company.     http://encyclopedia.thefreedictionary.com/Chapter+11

Rationale

In enacting chapter 11 of the Bankruptcy code, Congress concluded that it is often the case that the value of a business is greater if sold or reorganized as a going concern than the value of the sum of its parts if the business’s assets were to be sold off individually. It follows that it may be more economically efficient to allow a troubled company to continue running, cancel some of its debts, and give ownership of the newly reorganized company to the creditors whose debts were canceled. Alternatively, the business can be sold as a going concern with the net proceeds of the sale distributed to creditors ratably in accordance with statutory priorities. In this way, jobs may be saved, the engine of profitability which is the business is maintained rather than being dismantled, and, as a proponent of a chapter 11 plan is required to demonstrate as a precursor to plan confirmation, the business’s creditors end up with more money than they would in a chapter 7 liquidation. http://encyclopedia.thefreedictionary.com/Chapter+11

Details

All creditors are entitled to be heard by the court which is responsible for determining whether the plan of reorganization complies with the purposes of the bankruptcy law and provides for fair and equitable treatment of all parties in interest. http://encyclopedia.thefreedictionary.com/Chapter+11

Some contracts, known as executory contracts, may be rejected if canceling them would be financially favorable to the company and its creditors. Such contracts include labor union contracts, supply or operating contracts (with both vendors and customers) and real estate leases. The standard feature of executory contracts is that each party to the contract has duties remaining under the contract. In the event of a rejection, the remaining parties to the contract become unsecured creditors of the debtor. http://encyclopedia.thefreedictionary.com/Chapter+11

Chapter 11 is reorganization, as opposed to liquidation. Debtors may “emerge” from a chapter 11 bankruptcy within a few months or within several years, depending on the size and complexity of the bankruptcy. Debtors in Chapter 11 have the exclusive right to propose a plan of reorganization for a period of time. After that time has elapsed, creditors may also propose plans. Plans must satisfy a number of criteria in order to be “confirmed” by the bankruptcy court. Among other things, creditors must vote to approve the plan of reorganization. If a plan cannot be confirmed the court may either convert the case to a liquidation under Chapter 7 or, if in the best interests of the creditors and the estate, the case may be dismissed resulting in a return to the status quo before bankruptcy. If the case is dismissed, creditors will look to nonbankruptcy law in order to satisfy their claims. http://encyclopedia.thefreedictionary.com/Chapter+11 

Criticism

Some critics have claimed that Chapter 11 bankruptcy is excessively lenient in giving a needless “escape hatch” to the incompetent management of a failing company, damaging the efficiency of the economy as a whole and allowing poor managers to continue managing. It is unusual for the management of a company in Chapter 11 to be fired, as it is usually assumed that the present management team knows far more about the company and its customers than would a new set of management. [Bankruptcy laws do not prohibit the firing of Management] These critics note that in Europe, bankruptcy law is far less lenient for failing companies. 
http://encyclopedia.thefreedictionary.com/Chapter+11

Whether you call it BANKRUPTCY or not, the “Detroit 3″ are broke and are, in fact, BANKRUPT. 

A “Bailout” or “Handout” doesn’t guarantee the “Detroit 3″ will stay in business, it will simply delay the day of reckoning. THE KEY TO THE SURVIVAL OF THE “DETROIT 3″ IS THEIR SUCCESSFUL REORGANIZATION

Bankruptcy Reoraginzation doesn’t guarantee the survival of the “Detroit 3″ either – but “Bankruptcy Reoragnization” doesn’t gamble  Billions in taxpayor dollars either. Bankruptcy would provide the “Detroit 3″ with a “fresh start”, a “Bailout” just throws money at an “old problem”.

A “Car Czar” is not the answer – A “Czar” will just add layers of beauracracy over the true problems  

Definition: bu·reauc·ra·cy, n. pl. bu·reauc·ra·cies,   1. a). Administration of a government chiefly through bureaus or departments staffed with nonelected officials., 2. a). Management or administration marked by hierarchical authority among numerous offices and by fixed procedures: b). The administrative structure of a large or complex organization:3). An administrative system in which the need or inclination to follow rigid or complex procedures impedes effective action. http://www.thefreedictionary.com/bureaucracy

 The answer to how the “Detroit 3″ should address their problems  is simple, straightforward, tried and tested ….. seeking other alternatives is just political posturing while individuals pursue “secret agendas” behind the scenes.

I guess that is what we call politics today -

The Politicians and Press who say otherwise are telling you another “whopper”.

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