I just received this from my Congressman...I am on his list from the variety of letters I sent...Talk about a fast response! A good summary of the deal...
As you know, Congress recently failed to pass important bridge loans for Michigan's auto industry. In response to Congress' shortcomings, I have been working with President Bush to use part of the Wall Street bailout funding to assist the Big 3.
I am very pleased to share with you the news that this morning President Bush announced a $17 billion bridge loan program for Michigan's automakers. I am confident that this assistance will prevent disaster for Michigan's economy and Michigan workers. I am also confident that these bridge loans will give Michigan the helping hand we need to rebuild and renew for our future.
However, we must recognize that these bridge loans alone will not solve Michigan's problems. I am encouraged that President Obama has said he wants to help Michigan and our auto industry. I look forward to working with him to do everything possible to help the Big 3 get back on their feet again. As your Congressman, I will always continue to work create sensible energy, tax, and health care policies that created jobs and promote economic growth in Michigan.
Again, thank you for allowing me the opportunity to share my thoughts with you.
FACT SHEET ON AUTO LOAN PROGRAM
Amount: Auto manufacturers will be provided with $13.4 B in short-term financing from the TARP, with an additional $4 B available in February, contingent upon drawing down the second tranche of TARP funds.
Viability Requirement: The firms must use these funds to become financially viable. Taxpayers will not be asked to provide financing for firms that do not become viable. If the firms have not attained viability by March 31, 2009, the loan will be called and all funds returned to the Treasury.
Definition of Viability: A firm will only be deemed viable if it has a positive net present value, taking into account all current and future costs, and can fully repay the government loan.
Binding Terms and Conditions: The binding terms and conditions established by the Treasury will mirror those that were voted favorably by a majority of both Houses of Congress, including:
· Firms must provide warrants for non-voting stock.
· Firms must accept limits on executive compensation and eliminate perks such as corporate jets.
· Debt owed to the government would be senior to other debts, to the extent permitted by law.
· Firms must allow the government to examine their books and records.
· Firms must report and the government has the power to block any large transactions (>$100 M).
· Firms must comply with applicable Federal fuel efficiency and emissions requirements.
· Firms must not issue new dividends while they owe government debt.
The terms and conditions established by the Treasury will include additional targets that were the subject of Congressional negotiations but did not come to a vote, including:
· Reduce debts by 2/3 via a debt for equity exchange.
· Make one-half of VEBA payments in the form of stock.
· Eliminate the jobs bank.
· Work rules that are competitive with transplant auto manufacturers by 12/31/09.
· Wages that are competitive with those of transplant auto manufactures by 12/31/09.
These specific terms and conditions are non-binding, but firms that accept these loans must report why they have deviated from these terms and conditions and make the business case to achieve long-term viability in spite of the deviations.
In additions, the firm will be required to conclude new agreements with its other major stakeholders, including dealers suppliers, by March 31, 2009.
Member of Congress