Hoping to reap some of the benefit from the $700 billion bailout earmarked for the financial sector, executives from the US Automobile Industry were on Capitol Hill this week pleading their case for government assistance.
In a hearing before the Senate Banking, Housing and Urban Affairs Committee, representatives from General Motors, Ford and Chrysler testified that without government aid, their companies may have to file for bankruptcy.
General Motors is the company in the most dire straights. They announced on Monday that they will be delaying payments (general reimbursements for buyer incentives) to dealers in December. This comes in the wake of GM’s November 7th announcement that they may not have enough “cash” to pay for the day-to-day operations of the company - a situation that could force the company into bankruptcy.
A big difference in this economy for companies facing bankruptcy is the freeze of the credit market. In the past companies that filed under Chapter 11 were able to continue doing business because they could run on credit - the failures in the banking industry make it more and more difficult (if not impossible) for failing businesses to get loans.
This is just one reason why the auto execs are asking Congress to earmark $25 billion of the banking industry bailout for loans to their industry. |
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