Andrew Torgan
CNN Financial News Producer

Did we say $25 billion? Actually, make that $34 billion. Detroit’s automakers submitted their turnaround plans to Congress Tuesday with the hopes of winning approval for a loan package they claim is necessary for their survival. The plans included job cuts - as many as 31,000 in the case of GM — salary cuts for top executives and the likely elimination of some well-known brands. But the companies are now asking the government for as much as $34 billion in federal loans instead of the $25 billion they originally wanted. GM is asking for up to $18 billion. Ford is looking for up to $9 billion. Chrysler wants a $7 billion. We’ll see how Congress reacts to the new requests on Thursday, when the CEO’s of the Big Three complete their drives from Michigan to Washington in their hybids.

Meanwhile, local United Auto Workers leaders from across the country will hold an emergency meeting in Detroit this morning to discuss concessions the union could make to help auto companies get government loans.

The CEO’s of the Big Three drive their hybrids from Michigan to Washington - hoping to arrive in time for Thursday’s encore appearance before Congress.

Unloading some brands is on the car companies’ agenda, but we’re learning this morning that maybe you can’t go home again. The Swedish Government reportedly says that while it’s ready to support Volvo and Saab, it doesn’t want to take over the troubled brands from Ford and GM.

And just as Detroit’s Big Three presented their turnaround plans to Congress, we learned that car sales continued to plunge in November, falling 37% from a year-ago and hitting a 26-year low. The nation’s five largest automakers - GM, Ford, Chrysler, Toyota and Honda — each reported that sales dropped more than 30% from a year-earlier (47% in the case of Chrysler).

It’s not just the automakers that are hurting. More than 700 car dealerships across the country have shut their doors so far this year. And more than twice number that could close in 2009. Others are resorting to crazy promotions - such as one Dodge dealership in Miami that’s literally giving cars away.

Keep reading

Matt Apuzzo
Associated Press Writer

The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to an Associated Press review of regulatory documents.

“Expect fallout, expect foreclosures, expect horror stories,” California mortgage lender Paris Welch wrote to U.S. regulators in January 2006, about one year before the housing implosion cost her a job.

Bowing to aggressive lobbying — along with assurances from banks that the troubled mortgages were OK — regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way.

Keep reading

Editor’s note: The current bailout costs more than the Iraq war, the Vietnam war, the Korean war and the NASA missions — combined. The only thing that comes close is the cost of WWII…

Barry Ritholtz
Ritholtz.com

Whenever I discussed the current bailout situation with people, I find they have a hard time comprehending the actual numbers involved. That became a problem while doing the research for the Bailout Nation book. I needed some way to put this into proper historical perspective.

If we add in the Citi bailout, the total cost now exceeds $4.6165 trillion dollars. People have a hard time conceptualizing very large numbers, so let’s give this some context. The current Credit Crisis bailout is now the largest outlay In American history.

Jim Bianco of Bianco Research crunched the inflation adjusted numbers. The bailout has cost more than all of these big budget government expenditures – combined:

• Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
• Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
• Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
• S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
• Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
• The New Deal: Cost: $32 billion (Est), Inflation Adjusted Cost: $500 billion (Est)
• Invasion of Iraq: Cost: $551b, Inflation Adjusted Cost: $597 billion
• Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
• NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion

TOTAL: $3.92 trillion

Read more…

Workers leave a General Motors Powertrain plant last week.

Ron Dzwonkowski
The Detroit Free Press

Given everything else he will have to confront upon taking office Jan. 20, President-elect Barack Obama ought to do himself — and the country — a favor by devoting some of his pre-inaugural attention to the auto industry crisis. He doesn’t need a Big Three bankruptcy and resulting spike in unemployment coming across his Oval Office desk in the first month of his presidency.

Although as Obama keeps reminding the anxious country, America only has one president at a time and he’s not yet it, clearly he can exercise enormous influence on Congress as the incoming chief executive. Beyond that, he says he’s good at this sort of thing — bringing people together to craft solutions to tough problems.

Read more…

Daniel Kahneman and Andrew M. Rosenfield
The New York Times

THE chief executive of General Motors recently said bankruptcy is not an option and that even talking about it hurts business. He is probably right.

Bankruptcy has worked well for troubled companies in many industries — by providing a way for them to adjust their contractual arrangements with investors, employees, suppliers, distributors, dealers and others. But it is not well suited to automakers because cars are durable goods that buyers hold and use for many years. Indeed, 8 in 10 consumers say they would not buy or lease a car from a manufacturer that files for bankruptcy.

Read more…

Program Note: Be sure to tune in to watch Ali’s full report on breaking news on the government’s economic rescue effort tonight on AC360 at 10pm.

Ali Velshi | Bio
CNN Senior Business Correspondent

Back after Hurricane Katrina - after covering so many stories about how the insurance companies seemed to be deliberately trying to find ways to not pay the legitimate claims of insured hurricane victims, I embarked on a mission to find someone who had a good plan to work around the insurance companies. A way to insure your home against risk without going through one of the big, heartless companies. Know what I found?

Nothing.

In fact, there’s no way to spread risk without pooling it. And insurance companies are the very pooling of that risk. As unsavory as it is, they do it, and the only reason they engage in the risky business, is because there’s a promise of a good reward.

Its the same thing with banking. There are few ways to make money more easily than paying someone a little bit to hold their money, and then lending that same money to someone else for more money. The risk is that the person you loaned it to doesn’t pay you back, and the person who loaned YOU the money wants it back. Someone’s legs are going to get broken in the process. It’s a risky business, but if someone doesn’t do it, people won’t be able to borrow money to take their own risks - risks that could make them rich, and employ other people.

Because of these risks, companies who engage in them, at the highest and most important levels, are called Keep reading

David Gergen | BIO
AC360° Contributor
CNN Senior Political Analyst

As the United States economy has cratered, it has become increasingly apparent that we are suffering not just from a failure of institutions but, more deeply, from a failure of leaders across those institutions.

The list is long and depressing: a president who has been a catastrophe, congressional Democrats and Republicans who were looking the other way, regulators who were too lax, CEOs who gambled recklessly with other people’s money, consumers who borrowed far beyond their means, and on and on.

Americans are smart enough to see what is going on…

Read more…

Program Note: Suze Orman will be on AC360° tonight at 10pm ET to discuss how to keep your money safe.

Have questions about how the continued economic trouble will change the market; affect your stocks, mutual funds, 401(k)… your job?

Submit your financial questions here for Suze Orman and watch AC360° tonight 10p ET to get them answered.

Congressman John Dingell (D-MI).

Joe Klein
TIME.com

Lord, things are moving fast…and also not. The stock market is moving south–fast. The number of jobless claims are moving north–fast. Economic panic is in the air…and the atmosphere is Washington is changing faster than a speeding ballot (ouch, sorry). There is a stirring in the Congress, too, where nothing of substance has happened in a long, long time. Today the hopelessly dopey auto makers received a couple of stark warnings: First, California’s crusading Henry Waxman replaced the eternal John Dingell, patron saint of the gas-guzzlers, as Chairman of the House Energy and Commerce Committee, which is great news for those who are looking forward to the greening of Detroit. Then Nancy Pelosi called out the Big Three, saying no bailout without a plan. Now, no one really believes the Democrats will wit(h)hold money from the automakers–but the Big 3 would have to be stupider than idiotic not to understand that higher gas mileage standards and a whole bunch of other requirements are coming down the pike. They have very few, if any, defenders left in your nation’s capital and that’s real progress.

Read more…

Chrysler CEO Robert Nardelli, left, and Ford CEO Alan Mulally testify on Capitol Hill on Wednesday.

Ali Velshi | Bio
CNN Senior Business Correspondent

- Reid cancels the auto bailout vote because he doesn’t have the 60 votes to pass it; Congress (Pelosi, Reid, Frank) says we want to help but you need to show us a viable plan for what you’ll do with the money, we gave money out before and got burned when companies didn’t use it in the way they were supposed to; show us a plan for how you plan to use the money by Dec. 2nd and if its good we’ll reconvene Dec. 8th to vote on it.

- Will these companies be able to come up with a plan before Dec. 2nd. They didn’t present a plan this week to congress, Ford seems to have the best chance and is least in trouble, GM is in major trouble and could blow throw the entire $25 billion itself in 5 months will want all/most of the money, and Chrysler is a private company so its completely unclear on what they’re finances are like or what kind of plan they’ll come up with but it will mean opening up their books and private dealings to scrutiny, unheard of for a private company but necessary if they want public funds

- The auto industry had this week’s hearings to paint the worst case scenario and hope Keep reading