4LT GS RoadsterMarch 8 (Bloomberg) -- Republican lawmakers said Congress should stop providing General Motors Corp. with federal aid and let the company file for bankruptcy if necessary.
“The best thing that could probably happen to General Motors, in my view, is they go into Chapter 11,” Senator John McCain said on the “Fox News Sunday” program today.
The automaker could reorganize and renegotiate its labor contracts to come out “stronger, better, leaner,” McCain, from Arizona, said.
GM is cutting executive pay and will eliminate 47,000 jobs this year as part of a restructuring required to keep $13.4 billion in U.S. loans. GM’s Chief Executive Officer Rick Wagoner is seeking to persuade the U.S. Treasury to lend the carmaker as much as $16.6 billion more to survive.
The largest U.S. automaker has lost $82 billion since its last annual profit in 2004 and has been fending off speculation about bankruptcy for more than two years.
U.S. auto sales plunged 18 percent to a 16-year low in 2008, affecting GM, Ford Motor Co. and Chrysler LLC.
Senator Richard Shelby, the top ranking Republican on the Banking Committee, said on ABC’s “This Week” program that “subsidization of anything for very long never works.”
“The automobile business -- those companies, Chrysler, Ford and General Motors -- they’re in deep trouble,” Shelby, of Alabama, said. “I’ve suggested they go into Chapter 11. That’s where they belong. And they could reorganize.”
A Viable Company
House Minority Leader John Boehner said the government shouldn’t give GM any more money “until General Motors shows that they can be a viable company for the long term.”
“Anything short of that is just throwing good money after bad,” Boehner said on CBS’s “Face the Nation” program today.
A voicemail left seeking comment from GM today wasn’t immediately returned.
The Federal Reserve’s Term Asset-Backed Securities Loan Facility program, or TALF, may help struggling automakers raise cash to make loans to consumers.
TALF’s aim is to bring investors back to the market for bonds backed by auto loans, credit cards, student loans and small businesses.
The Fed will start disbursing TALF funds March 25 to prop up the market for consumer and small business loans, the central bank said on March 3. The program was originally set to start in February.
‘Not Life Support’
“Any money we give to the auto industry must be a lifeline, not life support,” House Speaker Nancy Pelosi told reporters at a weekly press briefing March 5, saying the ultimate decision remains with the administration. “This isn’t endless. But there has to be a sign of viability. And this needs to happen, and it needs to happen soon.”
In a statement released two days ago responding to a Wall Street Journal report, the automaker said that “GM has not changed its position on bankruptcy.”
“As we’ve demonstrated through a series of actions, GM is moving quickly and aggressively to restructure the business, and achieving that outside of court remains the best solution for GM and its constituents,” spokeswoman Renee Rashid-Merem said in a March 6 interview.
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“The best thing that could probably happen to General Motors, in my view, is they go into Chapter 11,” Senator John McCain said on the “Fox News Sunday” program today.
The automaker could reorganize and renegotiate its labor contracts to come out “stronger, better, leaner,” McCain, from Arizona, said.
GM is cutting executive pay and will eliminate 47,000 jobs this year as part of a restructuring required to keep $13.4 billion in U.S. loans. GM’s Chief Executive Officer Rick Wagoner is seeking to persuade the U.S. Treasury to lend the carmaker as much as $16.6 billion more to survive.
The largest U.S. automaker has lost $82 billion since its last annual profit in 2004 and has been fending off speculation about bankruptcy for more than two years.
U.S. auto sales plunged 18 percent to a 16-year low in 2008, affecting GM, Ford Motor Co. and Chrysler LLC.
Senator Richard Shelby, the top ranking Republican on the Banking Committee, said on ABC’s “This Week” program that “subsidization of anything for very long never works.”
“The automobile business -- those companies, Chrysler, Ford and General Motors -- they’re in deep trouble,” Shelby, of Alabama, said. “I’ve suggested they go into Chapter 11. That’s where they belong. And they could reorganize.”
A Viable Company
House Minority Leader John Boehner said the government shouldn’t give GM any more money “until General Motors shows that they can be a viable company for the long term.”
“Anything short of that is just throwing good money after bad,” Boehner said on CBS’s “Face the Nation” program today.
A voicemail left seeking comment from GM today wasn’t immediately returned.
The Federal Reserve’s Term Asset-Backed Securities Loan Facility program, or TALF, may help struggling automakers raise cash to make loans to consumers.
TALF’s aim is to bring investors back to the market for bonds backed by auto loans, credit cards, student loans and small businesses.
The Fed will start disbursing TALF funds March 25 to prop up the market for consumer and small business loans, the central bank said on March 3. The program was originally set to start in February.
‘Not Life Support’
“Any money we give to the auto industry must be a lifeline, not life support,” House Speaker Nancy Pelosi told reporters at a weekly press briefing March 5, saying the ultimate decision remains with the administration. “This isn’t endless. But there has to be a sign of viability. And this needs to happen, and it needs to happen soon.”
In a statement released two days ago responding to a Wall Street Journal report, the automaker said that “GM has not changed its position on bankruptcy.”
“As we’ve demonstrated through a series of actions, GM is moving quickly and aggressively to restructure the business, and achieving that outside of court remains the best solution for GM and its constituents,” spokeswoman Renee Rashid-Merem said in a March 6 interview.
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