December 3rd, 2008
10:13 AM ET

Please throw in another $9 billion

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2008/images/12/03/art.auto.bailout.jpg]

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.

The automakers are looking for their $34 billion as part of the government's $700 billion financial bailout plan. And the first official review of that plan says the Treasury Dept. has yet to address "critical" oversight issues to ensure the plan is working. The Government Accountability Office's study, presented to Congress Tuesday, found that the Treasury program needs more staff, better management, an improved transition effort and facilities to ensure banks are using bailout funds effectively. "Without effective oversight, Treasury cannot ensure that those receiving funds are complying with [the capital purchase program's] requirements," the report said.

Jobs took another painful hit in November, with planned cuts rising to the highest level in seven years. According to outplacement firm Challenger, Gray & Christmas, job cut announcements by U.S. employers soared to 181,671 last month, up 61% from October's 112,884 cuts, and 148% higher than the same period a year ago, when 73,140 job cuts were announced. November's total represents the second highest on record, shy of the 248,475 planned layoffs in January 2002, in the aftermath of the Sept. 11 terrorist attacks. Financial and retail industries were hit the hardest, while the energy, industrial goods and construction industries are actually hiring.

And payroll processor ADP says the economy shed 250,000 private-sector jobs in November. On Friday, we'll get the Government's monthly employment report. The consensus there is that the economy shed 325,000 jobs last month.

Wall Street's roller-coaster ride continues. Stock dropped out of the gate this morning as worries about the dismal economy once again darkened the mood on Wall Street.

Reported incidents of mortgage fraud grew by 45% in the second quarter compared to the year-ago period, as borrowers misstated their financial information to maneuver around tighter lending standards, according to industry data released Tuesday. Florida properties led the way with about one-fifth of mortgage fraud incidents reported in the second quarter. California was second and Illinois third, the Mortgage Asset Research Institute reported. Mortgage fraud incident reports had increased 42% in this year's first quarter, compared to the first quarter of 2007.

Gas prices fell 0.9 cents to $1.80 a gallon. That's the 77th consecutive decrease. According to AAA, the last time the national average price for a gallon of regular unleaded gasoline was near the current price was January 17, 2005, when the national average was $1.806. 3 states and Washington D.C. have regular unleaded gas prices of $2 and higher. 47 states have regular unleaded gas prices below $2. Oil prices are hovering around $47 a barrel. Crude dropped more than $2 Tuesday to a 3-1/2 year low.

And finally, we'll be looking for the Fed to release its Beige Book report, which summarizes regional economic conditions across the country. That's due out at 2 p.m.

Editor's Note: See Ali Velshi's full report on the markets and economy on AC360 tonight at 10pm ET.

Filed under: Andrew Torgan • Bailout Turmoil • Economy • Raw Politics
soundoff (12 Responses)
  1. Fred Casteel

    I say NO-NO-NO-.Who is going to bail-out the coal industry,timber industry,etc.

    The oil industry is,in a large part, dependant on the auto industry ,and with all the profits made in the past few years THEY could loan the auto industry the needed monies.

    However, if oil LOANS them the money, they would be required to pay it back.Not so with the taxpayers money

    December 3, 2008 at 10:17 pm |
  2. Marcus - Portland Oregon

    I say no... There is no need to bailout the big three. We can use them as an example, if we bail them out thier ego will be bigger than ever. They already think that they deserve this when they ran the companies into the ground. They had the electric cars in the 90 and early 00's but still maintained building gas guzzlers. If we dont teach them a lesson now they will never learn.

    December 3, 2008 at 2:48 pm |
  3. Jill

    This is a loan, not a free pass. Without it, hundreds of thousands of lost jobs and closed up vendors. These CEO's at least are doing whatever it takes to keep an entire industry afloat not like the bank bailout where it only helped the mis-managed individual banks. The automotive industry is a pillar of our economy and shouldn't be allowed to crumble.

    December 3, 2008 at 2:43 pm |
  4. Mindy

    I do not understand the attitude of many regarding the government helping the auto industry. We simply cannot afford to let our auto industry collapse.

    It amazes me that our financial institutions like Citicorp, AIG, and others can simple put their hands out for more and more money and nobody questions it or makes them disclose why they need the money and how they will use it. But when the automakers ask for help, then all of a sudden it's a huge problem. No bailout or help for the automakers! Why? There are millions of jobs at stake and the last thing we need is more people out of work. That certainly will not help the economy.

    If the automakers have a clear plan to recovery and are willing to cut salaries for CEO's and the unions are willing to take cuts, then I see no reason not to help save this industry.

    December 3, 2008 at 2:26 pm |
  5. Jim,

    Since the Fed is printing money with nothing to back it up why don't they just print & send us enough to bail us out?
    With only $20,000 I could pay off my one debt, & Pay my bills & needs ahead for a couple of years.
    As for Gas, You may be paying $1.80 a Gallon, We are still paying $2.25 a Gallon here. Our Legislators Here in California Legislated us into this hole- Maybe the shortfall should come directly out of Thier Pockets.
    Maybe then They'd learn noit to spend other peoples money like Drunken Sailors ( My appologies to the Drunken Sailors- as Our Legislators make the worst of you look like Angels)

    December 3, 2008 at 2:04 pm |
  6. Kathy

    I agree that the feds should loan money to the Big 3, but not give them a free buyout. It could just mean that more money goes down the drain with the same management and the same business strategies.

    December 3, 2008 at 12:47 pm |
  7. Tom Burke

    Everyone seems to forget that Ford Motor Co. along with General Motors and the Auto Workers came to the aid of this country during World War II when their factories were converted to make Airplanes and munitions etc. If it weren't for that effort of these companies and their employees the outcome may have been different. Regardless of the conduct of the CEO's that represent these organizations, if they present a good business plan to realign their companies they should get their bailout. It is the least America can do for them, they came through for us. I don't remember the financial institutions doing the same.

    December 3, 2008 at 12:42 pm |
  8. Claudia, Houston, Tx

    I've read and heard enough about the Big 3's bailout request and at first agreed they should be bailed out. Now I totally disagree. We should not have to pay to save any company that is failing. Jobs have been lost from failed companies in the past and jobs have been reinvented, it makes no sense.

    December 3, 2008 at 12:15 pm |
  9. earle,florida

    This country's a Republic. Originally founded on a,"Democratic (elected officials) Political System", Period! We are very close to becoming a "Communist Political System,Republic", yea,we look the other way (just like we've done in this country regarding other issues the past Thirty Years) ,and won't face the raw facts,but if you go ahead and bail-out the (State Run) auto-industry who now have raised the anti to $34 Billion from $25Billion in a week, just think what they'll be asking for in another year,pathetic! Now, the icing on the cake will come when NY,Calif,Ma,and the other Forty-Seven pieces of the once called Democracy we called America,....come a begging to the Politboro. Oh,I hope I haven't offended anyone,because that's what I'm trying to do,..."Wake Up America"!

    December 3, 2008 at 11:54 am |
  10. jim

    Congress should give the LOANS to the automakers. The auto sales slump is also affecting Foreign car makers. It is the financial crisis that has caused the drop in car sales not fuel efficient vehicles. The loans should be made only if the unions make extensive concessions. Otherwise, all should file for bankruptcy and under restructuring eliminate the unions. It is a fact that foreign carmakers in this country do not have unions. This will make everything equal.

    December 3, 2008 at 11:49 am |
  11. Cindy

    No matter how much money is thrown the Big 3's way it still isn't going to help up their sales!! The problem is that consumers can't get loans or afford to buy a new car. So the automakers will still have huge problems regardless if they get the money or not.

    The only way to help them is to help us by getting the economy back in order so people can afford to pay their bills plus have money to get a car. Also the Big 3 need to lower the prices on their cars and the banks need to actually loan money again.


    December 3, 2008 at 10:29 am |
  12. Joanne, Solvay, NY

    Amazing....our retirement funds are subject to "the mood" on Wall Street. I only wonder what I would have done had I known that my financial security would rest on "the mood" of people and corporation who need to show a loss on their balance sheets.

    December 3, 2008 at 10:19 am |