by Deb Cupples | Yeah, I know. This nation needs an auto industry, which is why Congress decided in September to lend $25 billion to America's Big-Three automakers and some suppliers. That's a lot of money.
Now, automakers are asking for even more money, and it looks like Congress and part of Obama's administration are leaning toward handing over said money. Bloomberg reports:
"Rahm Emanuel, President-elect Barack Obama's chief of staff, called the auto industry an 'essential' part of U.S. manufacturing, while stopping short of endorsing a proposal to use some of the $700 billion financial-rescue fund to aid automakers.
``'The auto industry is an essential part of our economy,' Emanuel said on ABC's `This Week.' Lawmakers should speed up the availability of $25 billion in government loans for the development of fuel-efficient cars, he said." (Bloomberg)
I have no problem with helping industries that genuinely need help -- if our helping those industries results in job creation or other things that help our nation's economy.
Here's one of the big questions: just how much money do automakers need? That question is tied to this question: how well have auto-industry executives spent shareholder dollars?
In 2007, General Motors had record losses of about $38 billion. That same year, GM's CEO Rick Wagoner got a 41% raise (to about $14 million).
While the CEO (and possibly hundreds of other execs and managers) were rewarded with pay raises as GM lost billions, the company laid off a couple thousand workers.
That was good for GM's execs but bad for our nation's economy.
In 2006, Ford Motor Company had record losses of more than $12 billion. Yet, the company gave its new CEO Alan Mulally $28 million for his first four months on the job. Mulally's total 2007 compensation was about $21 million. Four of Ford's executive vice presidents that year collectively took home about $39 million.
In short, just five Ford execs pocketed $60 million after a year of record losses (I don't know how much the hundreds of lower execs and managers pocketed). How many essential workers or supplies could that money have paid for?
In 2008, Ford planned to layoff hundreds of workers -- again, not good for our nation's economy.
If the U.S. Government plans to bailout the auto industry, then the government should tie strings to the loans: strings that limit how auto-industry executives can spend our tax dollars.
Memeorandum has commentary.
Other Buck Naked Politics Posts:
* Cutting Executive Pay Would Save Jobs
* Lehman Execs Redistribute Shareholder Wealth (to Themselves)
* AIG Execs Redistribute Shareholder Wealth (to Themselves)
* Execs Made Millions While Driving Companies into Ditch
* Are Bailout Funds Being Misused?
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