Alternative solutions, involving federal guarantees on loans issued by private banks, have been suggested as a possible plan for funding the bridge loans sought by the carmakers. This semi-privatized scheme reflects some of the growing concern that a failure in the automotive industry could undo some or all of the economic benefit of the $700 billion bailout of the financial industry.
Michigan Senator Carl Levin voiced precisely that concern during the hearings today, reports the Detroit Free Press. A failure of GM or Ford could result in a massive amount of corporate bonds issued by the two companies rapidly becoming worthless. That would cause major harm to many financial institutions, says Levin.
The automotive CEOs, for their part, have presented a largely apologetic front to the Senate in their requests, noting not only their past mistakes but the general discomfort associated with asking for assistance from the government. General Motors CEO Rick Wagoner said candidly, "We're sorry to be asking for this support. We wish the market conditions were better. They're not."
Chrysler CEO Bob Nardelli and Ford CEO Alan Mulally likewise seemed to be reluctantly pursuing the aid, though its necessity remained at the forefront of their remarks. "I can tell you in my 38 years of business, I have never attended a more important congressional session, where more is riding on the House and Senate hopefully making an informed decision," said Nardelli.
The matter of a final plan for the bailout, however, is far from settled, and not all of the Senators are so compassionate to the industry's plight. Nevertheless, there appears to be the beginning of an understanding forming as the hearings unfold.