Like most things in the media today the financial crisis on Wall Street is highly inflated for dramatic effect (a sign of low ratings.) As the record of exaggeration grows - credibility declines.

Most financial professionals see the purchase of the realty-backed Freddie/Fannie loan portfolio as a shrewd investment at fire sale prices. The bailout involves little cash (10-15% portfolio value) for a lot of secured paper (a small portion of loans are in default.) Even conservatives estimate the doubling of portfolio value within 2-5 years as real estate recovers. That yields U.S. Treasury $1.5 - 2 Trillion; which Congress is wrangling over now.

The part we find curious is: "EISA calls a set aide of at least 10% of funding to provide awards to small manufacturers of less than 500 individuals."

Presumably they refer to workforce size and not product lines. This would mean that Tesla, Fisker and Phoenix would qualify?

For those who champion government action to regulate fossil fuels - low interest loans to automakers qualify as such. By supporting low fossil technology, government steers manufacturers to retool for fuel efficiency and lower GHGs.

This is typical government legislative language intended to guide and not manage. The wording always sounds over controlling, but it is usually a complex way of expressing a simple principle. It seems better to have some guidelines on a low interest direct loan rather than give Treasury an authorization to spend $700b with no conditions at all.

In making loans to those manufacturers that have existing facilities, priority will be given to those facilities that are oldest or have been in existence for at least 20 years. Such facilities can currently be sitting idle.

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Great idea. Finance the failures, but shut out the new green companies making Electric cars.

I have read the post so far and I have to say as someone living in MI you do not get it. The big 3 are cash starved, the VEBA's and the cost cutting associated with new labor agreements will really kick in 2010 if my memory is correct. But this gives them money to retool, it has to be for a product that gets 25% better fuel economy. They have to and make it to 2010, this cash gives them money to retool and have their existing cash for the burn rates they have been experiencing.

Some great cars are coming from Ford and GM in the next few years, on top of their some great new entries. They need to get their 1st, these cash influx will do it.

@ HarveyD

My theory is that this has more to do with propping the Big 3 up so they can maintain funding their legacy costs (healthcare & pensions of their retirees) than anything else. As soon as the legacy costs have been radically reduced with either a nationalized US healthcare system or as the vast block of retirees move on from this world, the US government will shut down the gravy train of $$$$$ on demand. If you google "legacy costs""automakers" you can learn all about how massive an issue it is for the Big 3. ...ejj...

A few clarifications..
- despite the media narrative, this is not about or limited to B3
- any firm that produces here is eligeable and Toyota will no doubt get some money for Prius factory.
- to the contrary, clean diesel and full hybrids are about all that will qualify
- Most tooling $$ will go to suppliers - they make the stuff that is the advanced technology
- small firm set-aside is typical of these type programs and was mostl ymeant for 2nd and 3rd tier suppliers - but Tesla et.al should get lots of $$ here too
- most of the bucks for OEMs will come through the support of engineering jobs the language covers
- since the loans cover 30%, this investment leverages $80 billion in private investment
- this is for production of vehicles that use much less fuel, not vapor ware, not R&D, but products that reduce GHG and saveoil. If your company is ready to go with vehicles or components, it will have a very high probability of qualifying and getting a loan

Nonsense.

The earnest American do-gooder greens have demanded, and demanded, cleaner and cleaner cars, better then any where else in the world. And they demanded them, two decades sooner then rest of the world. Europe doesn't even conceive of matching US toxic emissions regualtions foras far as they project proposed new standards, well into the 2020s.

Then the demagogues added demands for better and better mileage cars, which were whistled through Congress with nary a thought, overnight, in less than 48 hours, to cheap applause. Even as they levy the costs on the Goose who lays the golden eggs.

Did the earnest clowns or government do-gooders ever include the money to develop the technology demanded in the laws? Never. Did they ever estimate the financial or competitive effect on the companies? Get real. Of course not.

If the technology didn't exist yesterday, why then it must be a Conspiracy by the evil men in Detroit, who were withholding the benefits these Green Saints demanded, yesterday, out of pure malice. Standard politics: Claim the credit and demonize the doers, for any delay or failure.

Well now the idiots have strangled the Golden Goose to the point that the entire industry, not just a weak sister, like Chrysler is financially failing. The Golden Goose is dying.

These Socialist Greens privatize the costs, and claim the public benefit and credit for themselves, without lifting a finger. They balk at the thought of actually paying the freight for what they mindlessly wanted, on their ridiculously compressed, unrealsitic but required, schedules.

Never did any of these fatheads propose that the government pay for the development of the technology demanded?

Quelle Novel Idee?!?

The auto makers were expected to bear the cost. But US automakers bear an out sized share of costs, more than other automakers, for two reasons.

First, with a majority of their vehicles are sold in the US market, they must absorb the development costs on the preposterous schedules demanded, or suffer substantially from reduced sales. Then they must still compete and offer vehicles with these costs embedded, against foreign-makers with a much smaller portion of their vehicles having the extreme US regulations and costs, imposed on the fleets they offered for sale.

Sometimes, American makers have subtracted other features from their cars, to match costs, only to have the Pecksniffian punks criticize Detroit for offering poorer products.

Secondly, US regulations are much tougher than any where else in the world. So the technology must be developed here, and initially fielded here. That is expensive. Foreign makers can then piggyback on the development after the technology has been developed by others.

US makers can not afford to abandon a US market segment due to the large financial impact, but foreign makers have done so in the past in the US, until requirements sort themselves out into realistic costs.

For example, no foreign maker builds any light diesel trucks here, yet. The T2B5 technology is being pioneered and payed for, by Chrysler/Cummins, and Ford and GM, perforce.

The foreign makers will come back in, after the heavy costs are borne by US makers. Look at Nissan's method of coping. Nissan's Titan pickups, will really be Dodge Rams for the next several years. Toyota is reconsidering its Tundra offerings. And Honda is saying it may abandon the truck segment completely.

This kind of corporate socialism is more accurately called 'fascism' or 'national socialism'! Sound familiar?
The shareholders get to pretend they are holding ownership in the corporation, but politicians and some government bureaucrats tell them how to get their companies managed. Of course, it doesn't help when shamelessly overpaid executives are driving the share prices by buying back their own stock and then getting paid bonuses for 'increasing shareholder value'. Meanwhile, the companies loose market share and profits, cut jobs and product lines. Where exactly is the increase in capital value of the company that would justify a REAL increase in share value?
Socialism of any stripe simply does not work. Whether it's the government kind or demanded by unions! And nationalizing health care will not improve anything either!
For the remaining points see @stas peterson.

It's amazing how the US auto industry is such a hot button topic.
I think it's because it reflects so much of american society: the worst snd the best.
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If there's a chance that $25B can speed up development of better cars, then it's worth the risk.
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After all, we've spent trillions on Iraq. Isn't our own country worth a small pitance (in comparison).
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A serious question remains.

Should the tax payers finance mismanagement, i.e. the car builders who refused to build leaner, cleaner, better cars to meet CAFE and customers transportation needs but forced brick shape gas guzzlers down our throat for so many years?

If we do, should the responsible managers be laid off? Should labour management and union members reduce there salaries and many unjustified goodies the got over the years?

Should this and future financial assistance be restricted to advanced lower cost batteries and electrified vehicles?

Otherwise, the $25B will not achieve much and we will be at the same point in 2 or 2 years.

The acquired culture has to change.

Rarely at GCC do we see language soar to the heights of "Pecksniffian punks..." A satisfying piece of Dickensiana. Respect is paid. Respect.

Current U.S. subsidies (grants, tax incentives and low interest loans):

Housing - Fannie Mae, Freddie Mac (combined private & public)- $700B
Education - college loans FY 2007-8 $34.56B
Agriculture - FY 2007 Farm Subsidies $25.0B
Ethanol Blenders Credit - FY 2007 $3.0B
Coal & Refined Coal - FY 2007 $3.0B
Nuclear - FY 2007 $1.267B
Wind - FY 2007 $724 million
Natural Gas - FY 2007 $227 million
Solar - FY 2007 $174 million
Hydroelectric - FY 2007 $174 million
Geothermal - FY 2007 $14 million