CNBC is just reporting that some sort of agreement has been reached in the Senate. Announcement to be made this afternoon.
The network is reporting that the funding will come from the $25 billion that was originally allocated for retooling. Now that money, if the deal goes through, will go to allow the automakers to meet their financial obligations. As everyone knows, the automakers have been struggling, their CEOs testifying before Congress this past week, are saying the situation hasn't been this dire in decades.
Jerome York, adviser to former GM board member, Kirk Kekorian, told Bloomberg today that the company actually has weeks left, not months. This contrasts to what CEO, Rick Wagoner has said to Congress and the Press.
Also today, UAW President, Ron Gettelfinger held a press conference warning about what could transpire should any of the Detroit 3 declare bankruptcy. He alluded that if one goes, they all would, as the pressure of one of their collapses would be so great as to take the whole thing down. That if GM and Ford shuts down, that the replacement in loss of autos would come from imports.
News of a possible deal reversed the market's direction. Prior to the announcement, the market had been in another downswing. Now stocks are on the rebound. Automakers like GM are up 50%.
As more information comes to light, I will be updating this entry. When that press announcement hits this afternoon, expect updates very shortly.
From a Detroit Free Press piece today:
Before the Senate can consider an auto bailout, it will have to close debate on an extension of unemployment insurance, a move that requires 60 votes. If that succeeds, the industry aid could be offered as an amendment to the bill. Even if approved, it would still need to be passed by the House, which is scheduled to depart today.
“It may be necessary to come back after Thanksgiving,” Reid said this morning. “Everyone just stay tuned and we’ll do the best we can.”
UPDATE: Senators Levin, Voinavich, and Stabinow have come up with the deal. Announcement to be made 2:30 EST.
UPDATE 2: CNBC's auto journalist, Phil LeBoa now reports that the money is definantly coming from that fund that was used to retool the factories.
UPDATE 3: Bloomberg is reporting that Wagoner would resign if it seals the deal.
Nov. 19 (Bloomberg) -- General Motors Corp. Chief Executive Rick Wagoner said he would ``do what's right'' should he be asked to resign as a condition for the biggest U.S. automaker to receive federal aid.
UPDATE 4: CNBC is reporting that this deal is dead if it reaches the House. More to come as this develops.
UPDATE 5: Congressional leaders, Nancy Pelosi and Harry Reid are now speaking. Both Pelosi and Reid are now stating that the compromise deal that was earlier mentioned is a no go. Pelosi states that until the automakers prove they have a new business plan and/or show they are accountable and a viable business, that no loan or funding will be approved.
Reid is also now stating that there won't be any votes until possible after Thanksgiving holiday. That also that by then the automakers need to show they are a viable, echoing Pelosi's remarks. Both have remarked on a statement put out by Michigan's representatives, and that they feel for them.
Stenyhoyer is saying that they will be working on this over the weekend. Barney Frank is saying that things won't be rushed, also highlighting how the public were not that happy with the past relief deal they did with another industry (banking). That everything has to be done in a careful way and that the skepticism of any such deal must be dealt with.
Reid was asked about what is a definition of "viability." He states that Sen. Dodd and Frank will be "instrumental" in coming up with a program or plan. Reid concludes that they will do what they can but that the companies must do what they can to help themselves.
Bottomline, Congress wasn't convinced by the automakers. So until they can prove they can exist on their own, there won't be any cash in either direct subsidy or in a loan package.
UPDATE 6: Ohio and Michigan's representatives, particularly Carl Levin isn't happy about what the Congressional leaders said today but seem subdued. He too is asking for a viability plan. He's on the podium explaining their compromise plan. Basically, that a separate agency deals with the money and that it isn't part of TARP.
Rep. Kit Bond is saying that the compromise bill will be a life saver.
Sen. Debbie Stabenow is now promoting their bill. That it does indeed work with what Rep. Frank wanted. She is optimistic that leaders, including business ones, will get together, even if its in December. Stabenow is now saying that manufacturing is fundamental to our economy. That it's not just autos, and that there would be a ripple effect. She's now highlighting how the Canadians are now coming to help the auto companies, that the Europeans are being approached by their domestic car makers.
Senator Voinavich is saying how there are millions of Americans tied to the auto industry nervous. He's proud of the compromise bill, and particularly thanks Sen. Levin. Voinavich would like to know what happens after the automakers get the loan. He also repeats the calls for evidence of viability. That bankruptcy, while economically possible years ago, is not doable today. That if these automakers do go down, that the entire economy will be in a severe recession if not "go over the cliff." He's questioning what should be in a plan to be submitted to the congressional leadership, hinting that the leadership should be clear on this. Voinavich is disappointed that nothing was accomplished today, it would have been nice to have something for the people for Thanksgiving.
UPDATE 7: The market, following the news, has begun to go down. Presently, the S&P 500 is at 776 down 36 points, the Dow is 7768 down 232 points. Both GM and Ford are off their intra-day highs. Also, keep in mind, that concerns about Citigroup have also put pressure on the market.