Auto bailout has lots of strings attached
Auto workers and retirees, who were part of a caravan from several Midwest states to Congress, march on Capitol Hill. They were urging lawmakers to save the auto industry with a bailout.
TEXT OF INTERVIEW
Just in case you're curious the White House got its first look at the proposed bailout package for Detroit at about 2:40 this afternoon, Washington time. It's not so much a bridge to the future as it is a bridge to, like, next March -- $15 billion, plus or minus. That's about what everyone's expecting it'll take to get Ford, General Motors and Chrysler out of their short term jam. To convince Congressional skeptics, though, the money is also going to come with plenty of strings attached. Our Washington bureau chief John Dimsdale is on the auto beat today.
John Dimsdale: Hello, Kai.
Ryssdal: All right, so strings attached, what kinds of conditions are on these loans?
Dimsdale: Well, there's 5 percent annual interest for the first five years and it jumps to 9 percent after that. This deal also limits stock dividend payments by the companies. It limits executive salaries. It gives taxpayers an equity stake in the car companies. There's also a cabinet level board to oversee the companies' finances. And that board will be headed up by a single overseer who's being dubbed a car czar. Now critics say the government shouldn't be in the car making business at all. But Joan Claybrook, a former administrator of the National Highway Traffic Safety Administration says the oversight board has to impose strict accountability.
Tape of Joan Claybrook: They need to have the authority and the capacity to oversee in great detail with sufficient funding and staff to keep close track of the Detroit companies' progresses. They should be very, very much on top of what decisions are being made by the companies in terms of their future designs and their capacity for that.
Ryssdal: Let's take accountability to the next logical step, John. What about current management? Is Rick Wagoner going to stick around at GM?
Dimsdale: Well, you know, their future is ultimately going to be decided by this government oversight board. But over the weekend, Senate Banking Committee Chairman Christopher Dodd, said that GM's CEO Rick Wagoner should specifically step down. Now GM issued a statement defending Wagner, saying that its employees, its dealers, suppliers and the board of directors believe that he is the person to lead GM through difficult times. But his fate will be up to that oversight board.
Ryssdal: And what about the White House John because obviously Congress sent down the language, the White House has it. What's going to happen?
Dimsdale: Well, they've raised already at least one objection to the Democrats' plan, the president wants more guarantees of the long-term viability of these car companies. The Democrats' plan calls on the industry to have that plan in place, but not until March 31st.
Ryssdal: All right, John Dimsdale in Washington. Thanks, John.
Dimsdale: You're welcome, Kai.