Stating "If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers," and "In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action."  Bush insisted "Government has a responsibility to safeguard the broader health and stability of our economy.”

Due to the Senate’s inability to act, the current administration allocated the remaining $13.4 billion available from the first allocation of TARP funds approved by congress, originally intended to assist troubled financial institutions.  The remaining $4 billion will be made available once Congress releases the final $350 billion.

Terms of the emergency loans are nearly identical to the terms required of banks receiving assistance:  Limits on executive compensation and convertible warrants that will give the Government a voting stake in the companies are both included.  Limits on private jets were added!  More importantly though, both car companies must provide they are viable entities by March 31, 2009 or the loans will become due and payable.  As part of the necessary restructuring, the United Auto Workers union (UAW) must agree to wages and benefits similar to non-union plants operated by Asian companies, such as Toyota, Nissan and Honda, by the end of 2009.  Good luck with that!

And it didn’t take long for the dust to settle on the auto bailout for the posturing and politicking to start.  Barney Frank, Chairman of the House Financial Service Committee has called on incoming President Barack Obama to change the provisions requiring wages and benefits to be competitive with foreign counterparts, claiming that the provisions is “an unfair assault on working men and women” and it “could give foreign auto companies in effect the ability to dictate wages for all America auto workers.”

Not to get political, but in his comments, Congressman Frank also stated “these provisions are unnecessary to achieve our goal”.  Clearly the long term viability of the U.S. auto industry requires a major restructuring of the wages and benefits of UAW employees.  To say that these provisions are “unnecessary” is irresponsible.  The fact that the Government is giving these entities a loan at all is borderline irresponsible given their financial situation.  To require a restructuring of the union benefits, forces the UAW to negotiate in good faith to achieve a solution, if they don’t then the both GM and Chrysler will find themselves in the same position they are in now.  The bottom line is if the auto workers want to keep their jobs, they will have to concede to lower wages and benefits.  The only alternative will be a disorderly bankruptcy where they could lose it all.