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Bob Corker, After Begging for Auto BK, Wants Dealers Exempted

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Wow. Even I am surprised at Bob Corker’s rank hypocrisy this time. After begging and begging and begging that America’s auto manufacturers be forced into bankruptcy last year–a process, after all, that allows companies to renegotiate all their contracts to make them more competitive–Bob Corker is now pushing to force those same manufacturers to not only honor the existing contracts they’ve got with dealers, but hold off on terminating them for 180 days.

 Chrysler and General Motors Corp would have to fully reimburse terminated dealerships and give them 180 days to wind down their operations under a proposal introduced on Thursday in the U.S. Senate.

"We filed this amendment to apply pressure on the automakers to keep their word to rejected dealerships and fully reimburse them for their inventories of vehicles and parts," said Tennessee Republican Bob Corker.

"We hope Chrysler and GM will take these appropriate actions and make this amendment unnecessary Corker said in a statement after introducing the measure.

Corker’s amendment would not permit judges in both automaker bankruptcies to approve government-funded debtor financing unless his terms are met.

Aside from the fact that this is probably mere posturing, at least in the case of Chrysler (because by the time this passed, it’d be too late, because the judge is going to finish this up next week), consider what this means. After having made sure that tens of thousands of working men and women will be out on the street overnight (not to mention the big number of supplier workers who will lose their jobs, too), after having made sure that the health care of hundreds of thousands of retirees is at risk, Bob Corker now wants his small businessmen friends to go through this process without losing out at all.

As I’ve said: what’s happening with dealers is tragic–for many of them, generations of life work is being ended almost overnight. But that’s no more or less tragic than the thousands of middle class workers losing their livelihood (and for many of them, that livelihood is a multi-generational thing, too). And Bob Corker was personally responsible for making sure there wasn’t a more viable way to do this back in December.

No Wonder Bob Corker’s Trying to Play Politics with Spring Hill

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Bob Corker attacked the US automakers for months, arguing they had a failed business model. But as soon as bankruptcy looked likely, Corker suddenly remembered many of his constituents–the GM workers at Tennessee’s Spring Hill plant–work for one of those "failed" automakers. Since then, he’s been pitching the relative merits of Spring Hill. He has gone so far as to suggest that if anything were to happen to Spring Hill, it could only be because of politics.

With sweeping new power the White House will be deciding which plants will survive and which won’t, so in essence, this administration has decided they know better than our courts and our free market process how to deal with these companies.

It’s been a long time since Washington has seen the kind of kowtowing that’s about to occur among members of Congress trying to curry favor with the administration to keep plants in their states open, and it will be interesting to see if the administration makes these decisions based on a red state and blue state strategy or based on efficiency and capable, skilled workers at each plant. If they use the latter, our GM plant in Spring Hill, Tennessee should do very well.

It’s a nice narrative for Corker, one that absolves him of  any responsibility for talking the company into bankruptcy. Yet there’s a detail Corker doesn’t want you to know. 

It’s that the Spring Hill facilities have already been mortgaged away as collateral to secure credit.

Note that GM has approximately $29 Billion in debt; $7 Billion of which is secured by Saturn assets (including Spring Hill, TN plant). The government’s $13.4 Billion loan to GM is also considered secured debt, with a vast amount of assets up as collateral. [my emphasis]

In other words, politics will have nothing to do with the decision on whether or not to close Spring Hill (not that any of you would believe a word Corker says, anyway). That decision will be left entirely up to whatever buyer comes along and buys it, because it will be the first thing liquidated in bankruptcy.

I guess Corker should have thought of that before he joined the plantation caucus, huh?

Bob Corker: “Bust the UAW Already, Obama!!!”

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Bob Corker was one of the people in Congress who refused to include auto dealer concessions to GM and Chrysler in restructuring negotiations last year. As such, he–and his cowardice–bears significant responsibility for neglecting one third of the concessions that needed to be made from automaker stakeholders; the Obama Administration has, for the first time, addressed dealer concessions in today’s announcement.

In addition, Corker’s purportedly brilliant bailout compromise last year (which amounted to "bust the UAW") included none of the bankruptcy-like legal authority to cramdown bond-holder debt. Partly as a result (and partly because of a sweetheart deal Corker’s buddies at Cerberus got), GM had no leverage to convince bond-holders to take the haircut they need to on its debt.

Nevertheless, Corker wasted no time in bitching about Obama’s announcement today.

“Firing Rick Wagoner is a sideshow to distract us from the fact that the administration has no progress to announce today,” said Corker, a Republican. “The administration is hoping the media and the public will stay focused on Wagoner and fail to notice that negotiations have not progressed since December.”

[snip]

“The administration is pursuing much of what we pushed for in December, but the delay of several months has increased the severity and sent billions of taxpayer dollars down the drain,” Corker said. “Now any investment is likely unrecoverable.”

Corker, you see, is hoping everyone will stay focused on his showboating, and not notice that Corker left several key elements off the table last year out of political expediency. Corker’s also hoping you ignore that Bush basically used Corker’s plan when he pushed through the Christmas Eve bailout–so if this plan has failed, it is Corker’s plan that failed. 

I guess Corker, who just a few weeks ago, was attacking draconian laws directed at just one class of people…

People out around this country, that have a right to be outraged, should also understand that if we do draconian things through laws, where we pass laws just to target a very few people, that they could be the very next person. 

…is sad that he wasn’t able to pass a draconian law that targeted a very few union workers. I guess Bob Corker is just impatient for someone to bust the UAW.

Though not impatient enough to recognize that the Administration’s criticism of GM’s focus on SUV’s and crossovers may jeopardize the new Traverse assembly in his state.

With the White House taking a harder line with automakers and insisting on more aggressive restructuring plans, Corker also predicted that members of Congress will begin “kowtowing … to curry favor with the administration” to keep auto plants in their states open. Read more →

An Appropriate Detroit Welcome for Bob Corker

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Unfriendly. Just as he deserves:

U.S. Sen. Bob Corker, Republican of Tennessee and nemesis of Detroit automakers and UAW workers in congressional hearings, came to the Detroit auto show for an up-close look Tuesday at the industry he’s reluctant to rescue.

And he got a taste of the kind of confrontational grilling that he laid on auto company chief executives and UAW President Ron Gettelfinger in Washington.

"I realize that I’m not popular here," said the trim, 5-foot-7 Corker, a tiny figure buffeted in a sea of microphones, cameras and jostling journalists as he walked the floor of the North American International Auto Show at Cobo Center.

"But I’m proud of the effort I put forth," Corker said of his attempt to forge a Senate deal for auto industry rescue loans that foundered when Gettelfinger balked at Corker’s demands for immediate wage reductions and other contract changes. After the Senate rejected a bailout deal, President George W. Bush approved $17.4 billion in bridge loans to keep General Motors Corp. and Chrysler LLC afloat.

Corker, not unlike the Detroit CEOs after the hearings in Congress, admitted Tuesday that he felt a bit misunderstood. "I don’t know how people perceive me," he said.

(Note, this is currently the Free Press’ most popular story, so I’m not the only one taking some pleasure in Corker’s discomfort.)

That said, I actually think this was a stunt dreamt up by Mike Cox, our current AG and wannabe 2010 replacement for Jennifer Granholm. Cox wrote a fairly timid op-ed for the WaPo the other day, inviting Senators to come visit the auto show (I say timid because Cox exhibited nowhere near the understanding of the industry–or the cooperation with the UAW–that Thad McCotter did in his excellent speech in the House in November).

And then, voila! There you had Bob Corker and Mike Cox, two reprehensible Republicans, sucking it up to the press today, pretending they might have the key to saving the auto industry. In a touch of theater, they even met at the Cerberus Chrysler booth, an appropriate place for them to discuss how to bail out their buddies in the private equity firm.

Kudos to Corker to actually showing. You think maybe he can take Mike Cox with him when he leaves?

Cerberus Still Seeking to Privatize Profit, Pass on Risk?

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Cerberus appears to be seeking to capitalize on the woes of the auto industry to do two things: first help its Republican buddies break the UAW, and after doing so, pawn off its unwanted "investment" in Chrysler onto the same union. I’m not sure I understand all the steps in this process, yet, but here are three data points.

Cerberus Protects Client Retirees But Not Chrysler Retirees

Let’s start with Cerberus’ statement on Friday in response to the bridge loan announcement. It celebrates the bridge loan as an opportunity to wring concessions from two stakeholders: bond-holders and union labor.

In addition to this, Cerberus believes that concessions by all relevant constituencies will be required to facilitate a full restructuring and recapitalization of Chrysler. In order to achieve that goal Cerberus has advised the Treasury that it would contribute its equity in Chrysler automotive to labor and creditors as currency to facilitate the accommodations necessary to affect the restructuring. Unless Chrysler’s labor costs can achieve parity with the foreign transplants, and without the restructuring of Chrysler’s debt, Chrysler cannot be restored to long-term health and the government loan will be unlikely to be fully repaid.

As seems to be true of all Republicans talking about concessions from stake-holders, Cerberus fails to mention any concessions from dealers, a critical requirement for any successful restructuring.

But what I like best about Cerberus’ statement (as in, like not at all) is the way it excuses its unwillingness to put any Cerberus money into Chrysler by appealing to America’s retirees.

Cerberus’ investors are comprised of pension and retirement plans (including funds invested for teachers, organized labor and municipal employees), charitable and educational endowments, fund-of-funds, and individual family savings. Cerberus is, therefore, entrusted with the life savings of many retirees, teachers, municipal workers and ordinary citizens.

As I’ve suggested, one of the two ways the UAW can meet Bob Corker’s Cerberus’ demands is to agree to allow Chrysler to renege on its promises to Chrysler retirees.

In short, Cerberus is pleading that it may require UAW retirees to give up their pensions because it must protect the pensions of other retirees. For some reason, Cerberus must have thought that logically inconsistent argument would nevertheless be more persuasive than admitting it might demand UAW retirees to give up a piece of their retirement so as to protect the current earnings of John Snow and Dan Quayle.

Read more →

Republican Bad Faith Negotiation, Again

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If you need any more proof that the Republican attempt to break the UAW a week ago Thursday was really just a political stunt, read this article. In it, Republican after Republican attacks Bush for providing relief to the auto industry. That includes four of the Republican Senators who–Bob Corker has assured us–would have supported his "compromise" deal from last Thursday:

John McCain:

John McCain is leading the way, saying it is “unacceptable that we would leave the American taxpayer with a tab of tens of billions of dollars while failing to receive any serious concessions from the industry.” 

John Kyl:

“I’m very disappointed,” said Sen. Jon Kyl (R-Ariz.). “The president justified his action with a false choice: it’s either this plan or abrupt liquidation of the companies. The White House seems to think that the industry didn’t have time to deal with the problem or prepare for an orderly bankruptcy, which is false.”

Judd Gregg:

“These funds were not authorized by Congress for non-financial companies in distress,” Gregg said, “but were to be used to restore liquidity and stability in the overall financial system of the country and to help prevent fundamental systemic risks in the global marketplace.”

Mitch McConnell:

“I have strong objections to the use of Troubled Assets Relief Program (TARP) funds for industry specific bailouts. And I do not support this action,” McConnell said. “But since the administration has chosen to use these funds to aid the automakers, it is important that the date-specific requirements on all the stakeholders be enforced.” 

Yet this is virtually the same bill, with one caveat: that the manufacturers, "can deviate from the quantitative targets above, providing that the firm reports the reasons for these deviations and makes the business case to achieve long-term viability in spite of the deviations."

In other words, the Republicans are pissed because the President’s plan allows the auto manufacturers to "deviate" from Bob Corker’s demand that the UAW lower wages below that of Japanese manufacturers’ workers by the end of the year if the manufacturers can make a business case to do so.  

These Republicans are pissed that GM and Chrysler don’t have to cut costs even if there’s a good business reason not to do so!!!

Not surprisingly, these Republicans are not alone in disavowing Bob Corker’s plan. Read more →

Killing GM in the Guise of Saving It

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Several articles out this morning make it look like the Bush Administration is planning on "helping" GM by dismantling it softly and breaking the union, all with no apparent focus to making it viable again.

First, there’s this story suggesting that Bush may ask for the same concessions as Corker demanded last week.

Over the weekend, analyst Brian Johnson of Barclays Capital issued a report suggesting that the White House may still demand some significant concessions from the United Auto Workers as a condition of any short-term financial aid.

"Based on comments on the CBS show Face the Nation this Sunday morning by Senators Corker (R-Tenn.) and Levin (D-Mich.), we believe it is highly likely that the White House bailout may impose many of the same conditions Senator Corker insisted upon on Thursday in his attempt to forge a compromise," Johnson said.

That amendment would have required General Motors, Chrysler, the UAW and bondholders to replace half of the companies VEBA contributions with stock, eliminate the jobs banks and buyouts and agree to competitive wages, benefits and work rules by March 31 or be forced into bankruptcy court. Johnson has advocated many of the same provisions in his roadmap for a GM turnaround.

Note, once again, the silence about concessions from dealers?

Yesterday, Carl Levin gave similar warnings that the Bush Administration–which refused to even place compensation limits in TARP that Wall Street bankers couldn’t drive an Escalade through–is going to place real demands on GM and Chrysler.

And meanwhile, just by coinkydink, Bank of America is calculating how much money GM would need to fund bankruptcy proceedings.

GM may need around $30 billion in debtor-in-possession loans, which are used to pay for a company’s operating expenses as it restructures under bankruptcy protection, Bank of America analysts said in a report issued late on Friday.

The $30 billion represents around two times GM’s working capital, with an additional $10 billion cushion for further earnings hits and to fund suppliers, the bank said.

GM had $36 billion in long-term debt as of September 30, according to a regulatory filing.

To support GM, and the industry, the government will need to lend funds to support the company in bankruptcy rather than out of bankruptcy, as that is the only way to ensure the government has the most senior claim on the automaker’s assets, the bank added. Read more →

Bob Corker’s Chumps in the Senate

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I’d like to second a point Trapper John just made at the Great Orange Satan. Senate Democrats have no business hailing Bob Corker’s bad faith claim to broker a compromise on Thursday night.

Let’s make this very plain.  Bob Corker just led the charge to kill the American auto industry, and with it some 10% of the American economy, because he wasn’t allowed to bust the UAW.  As such, Bob Corker is definitionally one of the most traitorous and despicable human beings ever to track slime across the floors of the Senate. He is attempting to take advantage of the financial crisis to literally dismantle the American middle class. He is beneath the contempt with which partisans regard even their most radical and craven domestic political opponents.  And to see three of the most prominent leaders of the party that portrays itself as the party of working Americans line up to commend this sanctimonious puppet of big money, this enemy of working Americans . . . well, it’s disgusting.  There’s really no other word for it.

I’d add one thing to Trapper’s post. Trapper is right that Corker should not be celebrated because of the way he attacked the notion that our workers ought to be able to sustain a middle class life.

Also, Democratic Senators ought to be a little more skeptical about Corker’s alleged good faith when considering his actions on Thursday.

As I pointed out the other night, Corker demanded that workers make date-certain concessions, without making the same demands of the other parties: the bond-holders in particular.

But since Thursday, it has become increasingly clear that the bond-holders appear to be the only other stake-holder Corker was demanding real concessions from. In the statements I’ve seen him make, for example, I don’t think I’ve ever heard him ask for concessions from dealers. Take his description of negotiations on Fox yesterday.

We began a process by first getting the bondholders to take $0.30 on the dollar, a $0.70 haircut. That had to happen first by March 15 and if it didn’t…

WALLACE: And they agreed to that.

CORKER: They have agreed – they got – yes. They have agreed that if they don’t get there, the company has to file bankruptcy.

So General Motors was at the table, Chrysler was at the table, Ford was at the table. They were in the ante room. They agreed to that.

Read more →

It’s Your Local Car Dealer’s Fault that a Congressional Auto Bill Failed

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The NYT, never an institution to quit when it’s behind, continues its crappy reporting on the auto crisis. In today’s installment, Micheline Maynard uncritically regurgitates GOP spin on why the auto bill failed last night, buying the GOP claim that it’s the UAW’s fault that Congress couldn’t give the auto companies a loan.

Opponents of a Congressional bailout for Detroit auto companies laid blame for its defeat Friday on the United Automobile workers union, which refused to agree to grant wage concessions in 2009 as a condition of the deal.

The entire article continues by totally misrepresenting the reason the UAW refused the GOP "deal."

Representatives for the union, which had already accepted a series of cuts in its current contract, sought instead to push any more concessions back to 2011, when the U.A.W.’s contract with Detroit auto companies expires.

Um, no. As the quotes included in the article make clear, the problem wasn’t starting concessions now. The problem was completing them by an arbitrary date within the next year. 

In a statement Thursday night, the union said it was “prepared to agree that any restructuring plan should ensure that the wages and benefits of workers at the domestic automakers should be competitive with those paid by the foreign transplants. But we also recognized that this would take time to work out and implement” using programs like buyouts and early retirement offers to bring in new workers at lower rates.

“Unfortunately, Senate Republicans insisted that this had to be accomplished by an arbitrary deadline,” the statement said.

[snip]

Mr. Corker said he proposed that wages and benefits of U.A.W. members be competitive with lower rates at American plants run by foreign rivals — Toyota, Honda, Nissan and B.M.W. — during 2009, and offered the union the opportunity to pick the date next year when the changes, which would be certified by the Labor Department, could be put in place.

See?!?! A deadline–and end point, not a beginning point. (And never mind that you could get mired in the question of what "competitive" means for that entire year.)

Maynard’s big problem, though, is in ignoring the underlying point: the UAW was the only stake-holder being asked to accept such a deadline.

Read more →

Who Killed the Combustion Car?

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I have to admit, it’s pretty gloomy in MI right now. Suppliers are doing quarterly plans–but putting a giant asterisk on the plan saying "If GM fails, we don’t know WTF happens." Ford is trying to anticipate how they can chase down and reclaim the tools from dying suppliers in time to keep their own supply chain alive. And a local environmentally-focused pol and I started plotting yesterday to turn MI into the beacon of new agriculture–not just because we’ve got the foundation to do so, not just because we need to think about what to do when our economy dies completely, but out of spite at the Californians who seem ready to jettison the Midwest and its jobs of late (soon their dying way of irrigation-dependent industrial Ag will be begging MI for a bailout!).

So it’s tough getting back on the automobile beat, when I can just blithely read tea leaves in the Blago mess. That said, readers are rightly kicking me in the ass for avoiding this very important subject. So I’m watching an empty Senate on CSPAN 2 and making a list: a list of all those who, either out of self-interest or because they are salivating to bust the union, have decided to let the American auto industry–and with it, the economy more generally–die. 

That list starts, of course, with the self-interested union-busters: Richard Shelby, Bob Corker, Jeff Sessions. Mitch McConnell has officially jumped onto the union-busting Japanese SUV, though it goes against the interest of a goodly number of his constituents. And Jim DeMint seems anxious to jump to the head of this class, with his call to free car companies from the "barnacles of unionism wrapped around their necks."

Fuck you, Jim DeMint.

But I am taking a perverse kind of solace out of the discovery that the guy who’s on top of all my other shit lists is on top of this one too.

Dick Cheney.

You see, Dick went to Congress to try to get them on board with the idea of saving the auto industry. And that made it worse.

Yesterday, [in spite of Cheney’s similar failure at rallying support for the financial bailout in September] White House nevertheless dispatched Bolten and Cheney to meet with Senate Republicans about the auto bailout plan, where they “heard a barrage of criticism — and offered few satisfying answers.” Read more →