The bailout-nation saga continued today as the Little Three carmakers from Detroit testified all day in front of the Senate Banking Committee. So far, the best thing I heard was from Sen. Robert Corker of Tennessee.
Mr. Corker wants a deal where, first, carmakers must restructure all their debt at some price, perhaps 30 cents on the dollar. But the bond owners must be satisfied so the government doesn’t have to pick up the tab. Second, Mr. Corker wants carmakers to get their worker-compensation levels exactly equal to those of the Japanese transplants in Detroit south. That means about $48 total hourly labor costs. GM’s labor costs were $73 in 2006, an estimated $69 in 2008, and are projected to be $62 in 2010. This, of course, includes pension and health benefits. If these two conditions are satisfied, Mr. Corker then believes some kind of government loan might be granted. We’ll have to wait and see where this thing goes.
But bailout nation continues in a story in this morning’s Wall Street Journal. Car rental company Avis wants TARP money now. BlueFire Ethanol, Inc. wants TARP money. The Equipment Leasing and Financial Association wants TARP money for its member companies. There’s a pattern here. Any economic sector that uses credit is coming ’round to the view that it deserves TARP money. That’s right. A TARP for all seasons. A TARP for all companies. That’s what we’ve created here.
The headline for this WSJ story is “Non-Bank Firms Seek U.S. Credit Relief.” Yup.