Automakers to Plead Case for Bailout - Black Enterprise
Black Enterprise Magazine January-March 2019 Issue

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(Source: General Motors Corp.)

Representatives from the Big Three automakers will appear before Congress this week to plead their case as to why they should be allowed to get $25 billion in loans from the government’s $700 billion bailout.

Today, Senate Majority Leader Harry Reid (D-NV) plans to attach a provision to a bill that was passed by the House to extend unemployment insurance. Senate Democrats are hoping to bring the matter to a vote by Wednesday.

Executives from General Motors Corp., Ford Motor Co. and Chrysler L.L.C. are gearing up to appear before the House Financial Services Committee tomorrow to request more governmental assistance in the wake of slowing sales. “U.S. auto industry bankruptcies would have a devastating impact on the domestic economy, many times larger than the aid automakers seek,” said Rick Wagoner, GM chief executive said on Sunday.

Sales of new cars and trucks in the U.S. are projected to decrease 12% this year compared with a year earlier, according to the McLean, Virginia-based National Automobile Dealers Association, reports Bloomberg. Together the Big Three automakers posted a net loss of $7.6 billion.

Congress has already approved a $25 billion loan program through the Department of Energy that requires car makers to produce energy-efficient cars. However, Wagoner suggests that the money from that program won’t reach GM in time to head off bankruptcy or worse.

“This is a national problem, without any question. We’ve got at least 3 million jobs dependent upon this industry surviving. This is not a Big Three problem alone,” said Carl Levin (D-MI), a senior member of the Committee on Small Business and Entrepreneurship, on NBC’s Meet the Press. “This current crisis is a crisis in the economy where there is no credit available to purchase and where people are not buying cars because they are afraid.”

Congress has three options to take in considering a rescue of the auto industry. First, some Democrats in Congress would like for the automaker rescue to come from the $700 billion bailout of the financial industry. Others believe that it would be better to create a separate $25 billion bailout. Lastly, Congress could allow automakers to use the $25 billion that was previously approved for developing energy-efficient cars to aid in their overall financial problems.

The White House opposes giving automakers an additional $25 billion. White House press secretary Dana Perino said giving more funds to Detroit is more of a subsidy that won’t be paid back, whereas the financial industry bailout was an investment.

“TARP was not intended for individual industries,” says Perino, who believes opening up the Troubled Asset Relief Program to the auto industry would not pass the Senate. “TARP was specifically designed to help taxpayers get a return on their investment.We are providing capital. And it has to be paid back.”

Perino said that President George W. Bush wants to help the automakers get through this “rough patch” and provide for their long-term viability, but not at the

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Marcia Wade Talbert

Marcia is a multimedia content producer focusing on technology at Black Enterprise Magazine. In this capacity she writes and assigns stories to educate readers about social media; digital integration; gadgets, apps, and software for business and professional development; minority tech startups; and careers in STEM (Science, Technology, Engineering, and Mathematics). In 2012, she received two Salute to Excellence Awards from the National Association of Black Journalists and was recognized by Blacks in Technology (BiT) as one of the Top 10 Black achievers in the tech arena for 2011 at SXSW in Austin, Texas. She has spoken about technology on panels for New York Social Media Week, at The 2012 Rainbow/PUSH Wall Street Summit, as well as at Black Enterprise’s Entrepreneurs Conference and Women of Power Summit. In 2011, chose her as one of 28 People of Color Impacting the Social Web, and through crowdsourcing she was listed as one of BlackWeb2.0's/HP's 50 Most Notable African American Tastemakers in Social Media and Technology for 2010. Since taking on the role of Tech editor in September 2010, she has conceived and produced five cover stories on Technology and/or STEM and countless articles, videos, and slideshows online. Before joining as an interactive general assignment reporter in 2008, she freelanced with Black Enterprise beginning in 2003 while working as the technical editor at Prepared Foods magazine. There she further honed her writing skills and became an authority on food ingredients, including ingredients used in food fortification and enrichment. Meanwhile, her freelancing with Black Enterprise and helped her stay current on issues pertaining to the financial and business welfare of African Americans. As a general reporter for Black Enterprise she attended and reported on the Democratic and Republican National Conventions, where she interviewed Valerie Jarrett, senior advisor and assistant to President Barack Obama and U.S. Attorney General Eric Holder. Marcia has a Bachelor of Science degree in Agriculture with an emphasis in food science from the University of Minnesota, and a Master of Science degree in journalism from Roosevelt University in Chicago. En route to her secondary degree, she served as the editor-in-chief of the Roosevelt University Torch, a weekly, student-run newspaper. An avid photographer and videographer, Marcia is one of several employees at BLACK ENTERPRISE who interned for the publishing company as a college student. She lives in New Jersey with her husband, a food scientist; her seventeen-month-old daughter; and “The Cat”, but still considers Chicago home.