Time for Action on Auto Rescue Plan

December 16, 2008

Once again, partisan politics prevails over national interest in the backdrop of the economic crisis due to skyrocketing foreclosures, credit crunch and now,

Record unemployment at 6.7%, expected to rise further from the lack of action by the legislators, leaving the fate of the million workers in our nation hanging in balance.

The extreme demands by the legislators voting against the rescue plan to,

The United Auto Workers (UAW) union to agree to steep wage cuts to bring their pay equivalent to the Japanese auto industry is preposterous and poses the legitimate question to them in return.

Have these legislators made similar demands to the CEO’s of the auto industry prior to urging UAW to agree to such double standards?

Further, the following question from a wise representative of democracy to the so-called lawmakers otherwise the boulders contributing to the roadblock or failure of any important legislation is praiseworthy.

Even though the question is in context with the California State of affairs, it is still relevant as the Californian legislators particularly the Republican Party representatives have sworn to mimic their federal counterparts in escalating the economic recession.

Ref: Mercury news, December 12, 2008 – Thank you.

"What sacrifices are our leaders making?

Considering the latest estimates of the financial crisis facing California, I think we should all be asking our elected officials what sacrifices they plan to make during these hard times.

We the taxpayers are bracing for increases in taxes and fees, decreases in services, huge layoffs of public and private sector employees.

I have yet to hear anything about cuts being considered to the compensation, pension plans, health care, car allowances, per diem, etc., that our representatives enjoy.

The fact is that these so-called leaders are at the helm of this shipwreck.

Ultimately, it is their responsibility to run this state in a fiscally responsible manner.

They have failed miserably.

We should demand that any plan to bridge this budget gap start with cuts to those who failed us. "

Ken Kramasz


The demand is fair and justified.

More grinding facts on the consequences of bailout failure:


Article: Suppliers see their demise if Big 3 become insolvent

By Bill Vlasic and Leslie Wayne, New York Times.

Ref: Mercury News, December 12, 2008 – Thank you.

The excerpt from the article deserves attention.

“The hypotheticals about the domino effect of the companies’ troubles through the vast network of auto supplier firms – which employ more than twice as many workers as the carmakers – are becoming real.

Top of Pyramid

The Big Three, and their foreign competitors, are what most people think make up the entire auto industry.
But the car manufacturers are just the top of the pyramid.

While GM, Ford and Chrysler employ 239,000 people in the United States, the country’s 3,000 or so auto suppliers have more than 600,000 workers.

Most of the suppliers are not highly waged; they have no big pensions,…

Washington has a myopic view of the auto industry.

They just think of the Big Three and don’t think of us,” i.e. the suppliers.


Challenge the Opponents:

What strategy or proposal the White House and the opposing legislators have in mind about the economy?

So far, they have been highly successful with their dogmatic policies that have led the economy towards recession.

With the lack of action in this matter, the collapse of other industries is imminent worsening the situation comparable to a black hole.

Aren’t they satisfied with the calamities they have brought upon this nation, that they are further determined to see through the peril before their much-awaited departure from the White House?

All these legislators including Senate Democrats in opposition to saving jobs and helping families through this rescue plan ought to think wisely, as they might be inadvertently putting themselves on notice in 2010.

For some, it might happen even sooner as there is a process called recall in a democratic system.

The people of the United States have learned a harsh lesson through Bush administration.

Conventional wisdom dictates that when something is of no value, it is best to discard and replace it with one of use that serves the purpose.

In the case of the incumbent administration, the notion might be what harm any inaction might do now as the term is nearing end.

History will do its part with judgment on the performance of any administration regardless of the cosmetic presentation by the representatives of the outgoing administration.

Notwithstanding the impending justice to be delivered for crime against humanity specifically violation of constitution thus far by oligarchy and their members.

In addition, the repercussions of the failures of any administration or individuals representing a political party cannot be ignored, especially if they are encouraging their clan (as it appears to be the norm in contemporary politics including democracy ) to retain Power further down the road.

No matter, how one circumvents the situation leading to the downfall of the once prosperous economy, the fact remains that willful negligence or malevolent policy to settle scores with opponents will result in their own ouster from the positions as legislators.

The elimination of the namesake lawmakers aka troublemakers will be the result of illogical conduct and abuse of power against the people and nation they falsely pledge to serve at all times and diligently during crisis.

Options for the White House to salvage the demise of the political party they represent in the coming elections is to act in the best interests of the people who are the electorate with the ability to entrust Power through electoral process.

Up until recently, the serious backlash suffered by the Republican Party represented by the incumbent administration in 2006 and 2008 is ominous that those who fail to deliver their commitments to democracy will share similar outcome reaching the point of no return to power.


Action Required:

It is incumbent on the Treasury department and the White House to come forward and immediately release the unused $15 billion from the $350 billion financial bailout draw down currently held in cash to rescue the autoworkers and millions of jobs at stake.

Failing to avert the inevitable collapse of the industries providing food and livelihood for the electorate with power to elect officials to serve the public will be detrimental to the success and approval of the final bailout $350 billion defending the finance industry.

The authorization of the $15 billion from the current $350 billion is imperative barring any mandatory demand for wage cuts and benefits to the workers and UAW.

Any conditions to the rescue plan will apply to the CEO’s of the industry from cashing in bonuses and extravagant remuneration including kickbacks and shady Washington deals with the lobbyists by the legislators elected to protect national interest rather than self-interest.

Urgency of this auto rescue measure will prove the effectiveness of democracy in action.

Therefore, it is the responsibility of the Treasury department along with the White House to act promptly by releasing the cash held $15billion from the previously approved taxpayers’ $350 billion for the financial bailout and save the American workforce as well as the economy.

Procrastination rather than action in this matter will lead to the unrequested irrelevance and perhaps the end of a major political party in the coming elections by making way for the emergence of new political faction in the near future.

Thank you.

Padmini Arhant

P.S. The suggested plan of action also applies to the California legislators, currently engaged in threatening democracy and progress in all fronts of the legislation.

Rescue Plan – Big 3 Auto Makers

December 8, 2008


The Federal Reserve and the Treasury department secured a $700 billion jackpot for the finance industry bailout.

Major beneficiaries –

The financial institutions comprising investment banks for bad decisions in the subprime mortgage debacle with a prominent mismanagement by Hedge Fund managers.

The insurance industry for navigating unchartered waters in search of profit from risky ventures with no guaranteed returns.

During the financial sector bailout bankrolled by the taxpayers, there were supposed to be preconditions to the bailout of the financial institutions.

Other than oversight and warranted regulations, they were,

The immediate recovery plan for the housing market – predominantly the stopgap measures on foreclosures.

Latest news articles and reports confirm otherwise.

That the foreclosures have been record high subsequent to the financial bailout.

As for other issues…

Treasury role in easing the burden on financial institutions with liabilities in the form of bad loans and securities were the reasons presented to secure the huge sum of $700 billion at that time.

Whatever has happened to accountability?

Where is the oversight?

Why foreclosures are soaring nationwide despite taxpayers’ investment in the financial sector to cure symptoms of this nature in the housing market that has contributed to the current economic recession?

It is apparent from the struggling and still volatile stock market that the financial sector has not met the requirements and honored the agreements with the taxpayer on all of the issues ranging from –

Reviving the housing market by temporarily freezing foreclosures and reassessment of payment plan programs with default homeowners.

Providing liquidity to commercial sectors to jumpstart the economy.

Last but not the least, transparency to the American public with their current lending practices.


As per http://moneynews.newsmax.com/streettalk/bailout_half_gone/2008/11/12/150364.html

Street Talk – Thank you.

Who Got Bailout Money So Far?

Wednesday, November 12, 2008 9:09 AM

"The Treasury Department’s $700 billion bailout plan, also known as the Troubled Asset Relief Program (TARP), is one of the main U.S. tools to address the financial crisis.

The Treasury Department on October 14 set aside $250 billion of the program to buy senior preferred shares and warrants in banks, thrifts and other financial institutions.

Half that money was allocated to nine big banks, the Treasury Department has said.

Another $38 billion has since been earmarked for regional or small banks, according to statements from individual banks.

On Monday, the department announced its single-biggest TARP investment — $40 billion in American International Group — which the government said would not come from the $250 billion bank capital program.


The TARP has so far committed the following funding:

AIG $40 billion

JPMorgan $25 billion

Citigroup $25 billion

Wells Fargo $25 billion

Bank of America $15 billion

Merrill Lynch $10 billion

Goldman Sachs $10 billion

Morgan Stanley $10 billion

PNC Financial Services $7.7 billion

Bank of New York Mellon $3 billion

State Street Corp $2 billion

Capital One Financial $3.55 billion

Fifth Third Bancorp $3.45 billion

Regions Financial $3.5 billion

SunTrust Banks $3.5 billion

BB&T Corp $3.1 billion

KeyCorp $2.5 billion

Comerica $2.25 billion

Marshall & Ilsley Corp $1.7 billion

Northern Trust Corp $1.5 billion

Huntington Bancshares $1.4 billion

Zions Bancorp $1.4 billion

First Horizon National $866 million

City National Corp $395 million

Valley National Bancorp $330 million

UCBH Holdings Inc $298 million

Umpqua Holdings Corp $214 million

Washington Federal $200 million

First Niagara Financial $186 million

HF Financial Corp $25 million

Bank of Commerce $17 million

TOTAL: $203.08 billion



In addition to the TARP program’s $40 billion capital injection into AIG, the Federal Reserve is providing the company with up to $112.5 billion in separate loans and funds for asset purchases.

Aid to the huge insurance company came after counterparties and rating downgrades forced AIG to post large amounts of collateral for its credit derivatives positions.

Some other insurers are interested in cash infusions, but must own a thrift or bank in order to qualify under the terms of Treasury’s current capital injection program.



The TARP program set a November 14 deadline for smaller banks to apply for capital injection funds remaining in the pool of $250 billion. The deadline will be extended for non-publicly traded banks.

The government’s preferred shares will pay dividends of 5 percent annually for the first five years and 9 percent after that until the institution repurchases them. Participating banks must comply with Treasury restrictions on executive compensation, which limit tax deductibility of senior executive pay to $500,000.

They require bonuses to be "clawed back" if earnings statements or gains are later proven to be materially inaccurate and prohibit "golden parachute" payments to senior executives.


Struggling automakers General Motors Corp, Ford Motor Co and Chrysler LLC have requested tens of billions of dollars in Treasury aid under TARP. However, the Bush administration says the TARP program was designed by Congress to help the financial service sector, not the auto industry.



The remaining $350 billion in TARP funding can be accessed only after the White House formally notifies Congress. U.S. House Financial Services Chairman Barney Frank has said that if the initial banks participating in the program do not use the money for lending, Congress could block authorization of the final funding."


Reality Check:

Despite the sizeable cash infusion in the financial sector to revive the stagnant economy, the results confirm the dismal performance in all quarters of the economy.

It is imperative for treasury and the Federal Reserve as the guarantors of the financial industry bail out to provide legitimate explanation to the American taxpayers in their failure to achieve the TARP purpose, prior to even contemplating to secure the remaining and final $350 billion amount.

Auto Industry – Crisis

Meanwhile, to focus on the pending national issue concerning the American workforce in the manufacturing sector of the auto industry,

It is important to shed light on the current unemployment status of our nation.

As per the recent reports…

Source: http://www.free-press-release-center.info/pr00000000000000028189_us-unemployment-rate-touches-67-halfmillion-jobs-lost-in-november-employmentcrossing-revs-up-efforts.html – Thank you.

US Unemployment Rate Touches 6.7%; Half–Million Jobs Lost in November; EmploymentCrossing Revs Up Efforts

Employers slashed 533,000 jobs in November, the most in 34 years, according to the latest US Bureau of Labor Statistics report.

Mind-boggling figures of job losses reported for the month are statistically the most since December 1974.

The unemployment rate of 6.7% was the worst rate since 1993. It’s only the fourth time in the past 58 years that payrolls have fallen by more than 500,000 in a month.

EmploymentCrossing, the leading job board in the US, agrees that the current job market has been increasingly ruthless on the employees, as widespread cuts attain a new high.



Obviously, it is a dire situation demanding immediate solutions to the burgeoning problems of the job market.

Delayed response in addressing the collapse of the major manufacturing sector will worsen the fragile economy already in recession.

There have been various good proposals from all corners and discipline presented so far for consideration by Congress.

Most proposals target similar aspects of the financial industry bailout like,

Oversight, strict regulations and accountability.

While, others include emphasis on fuel-efficient and/or hybrid cars to deal with potential energy and present environment crisis.

The Union role in the auto industry has been unfairly targeted in the outcry against protecting the manufacturing jobs.

Without Union existence and support, the outrageous trade practices by Corporate America towards the American workforce will be emboldened with an adverse effect on the middle and poor income groups.

Typically, such scenario will widen the pre-existing canyon between the haves and have-nots.

Rescue Plan with Clear Solutions:

First and foremost, the incumbent administration’s refusal to recognize the seriousness of the auto industry problem as an impending job market crisis is no revelation.

It is appalling that the same administration instantaneously reached out to the financial industry with the notoriety for poor judgment that triggered the entire economic crises.

Yet, it holds reservations for a sector seeking assistance with a pledge to comply with all and any legislative requirements to save the manufacturing jobs.

Moreover, unlike the financial sector, in this instance the taxpayer investment is secured with tangible assets upon default by the companies.

Given the grim unemployment status, economic recession and gloomy Retail forecasts for the holiday season, the auto industry jobs must be rescued at all costs.


As highlighted above, the purpose behind TARP to financial industry was to facilitate liquidity in commercial lending to various other sectors of the economy.

Referencing U.S. House Financial Services Chairman Barney Frank,

“if the initial banks participating in the program do not use the money for lending, Congress could block authorization of the final funding.”

The comment is fair and valid.

Due to the breach of $700 billion agreement proposal by the financial institutions,

The entire sum of $75 billion requested by all three major automakers will be approved and allocated accordingly:

1. The unused $15 billion from the previously drawn amount of $350 billion financial bailout is to be utilized in the approval of the $75 billion to protect the auto industry jobs.

2. The remaining $60 billion will be derived from the final amount of the $350 billion financial bailout package through an emergency resolution by Congress.

3. The recommendation to tap into the $25 billion energy bill to assist the automakers would derail any progress aimed at clean energy programs in the future.

Therefore, the rescue package for automakers is to be appropriated from the excessive financial bailout fund.


Compliance by Automakers:

A. Besides the standard protocol for oversight, stringent regulations and executive competence, the manufacturing of hybrid models to satisfy the energy efficiency requirement is paramount to this deal.

B. Equally important are the recognition and improvement of labor laws, trade practices to benefit the American workforce and thereby increase productivity yielding expected profits for payoff towards the rescue plan.

C. Transparency and commitment to achieve pledged goals is vital to avert future crisis and maintain credibility with lenders.

D. In addition, exorbitant remuneration perks and bonuses to CEO’s of all three corporations will be eliminated from the package.


Congressional Obligation:

It is incumbent on Congress particularly with members across the aisles to address the serious challenge in the manufacturing sector currently facing the nation by putting partisan politics aside and prioritizing the needs of the American labor.

The nation is grappling with an economy saddled with —

Multi-trillion dollar debt

Financial crisis

Deteriorating housing market

Unpredictable stock market

All of the above factors threatening the stability of every industry and the fabric of the economic infrastructure.

Any more layoffs in any industry particularly the manufacturing companies will debilitate the economic recovery plans in process.

It is time to bid farewell to party bickering, earmarks and Pork Barell spending that have resulted in Washington gridlock on all matter of national interest.

Legislators must act diligently and promptly by approving the entire amount $75 billion from the suggested source for all three companies to protect American jobs and the ailing economy.

It is time for action and not procrastination.

Finally, people in a democracy elect representatives and entrust power to solve problems and safeguard their interests so,

National interest must supersede all other interests.

Thank you.

Padmini Arhant