I don’t know about you but I have been receiving a number of emails from various entities/organizations within the automotive industry encouraging me to contact my representative and senators to vote in favor of bridge loans to help keep the Big 3 going. In two cases, the communication included information on potential job losses without a bridge loan. Consider this, “In the interim, the situation remains very serious. As an industry, we are highly interdependent. The failure of one of the Detroit Three would create a devastating ripple effect across the industry and the broader economy. The loan the industry is requesting would directly address the current economic and liquidity crisis, and it would help build a bridge to the future so we can contribute to the national economic recovery.”
One letter said in particular that Ford would use the money to continue its transformation to being a lean profitable company. The second letter, excerpts found here on the OESA website (Original Equipment Supplier Association) point to the need for the loans as due to a lack of access to credit and the big downturn in sales. These are all valid points and by now, most everyone is aware of the obvious reasons why the Big 3 have made their request to Congress for financial assistance. And once again, we state our case against a bailout. But the one thing missing from each of these letters from top industry brass relates to the “how”. How exactly will the money be spent? What is the bridge loan to be used for exactly?
I don’t know about you but I’ve never gotten a loan just because I said I wanted or needed one. And as a business? Well, nobody loans small businesses anything unless the loan is 100% personally guaranteed, which sort of makes you wonder why a small business would even try to obtain a loan. But forget about small business loands for a second. What the auto industry is asking for is sort of like what our banks have given us personally already…unlimited, unfettered access to easy credit, without looking at our ability to repay what is borrowed.
Maybe the Big 3 can figure out some micro-lending program from the likes of this banker who just penned a super scary economic scenario in the New York Times on America’s impending credit card debacle. After all, easy personal credit is the American way. [Editor’s Note: Please note sarcasm in last sentence]
And as a postscript, we understand a restructuring plan is part of the industry’s next round of bailout requests bailout requests