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STEVE INSKEEP, host:

It's Morning Edition from NPR News. Good Morning. I'm Steve Inskeep. Let's find out now what two big automakers will have to do in return for a recue from bankruptcy. President Bush says the U.S. will provide $17.4 billion in loans. He made that statement this morning. The loans go to General Motors and Chrysler, not Ford, which says it can do without for now. The president described these as short-term loans, which could be called in a few months if the automakers fail to change.

(Soundbite of press conference)

President GEORGE W. BUSH: They must pay back all their loans to the government and show that their firms can earn a profit and achieve a positive net worth. This restructuring will require meaningful concessions from all involved in the auto industry - management, labor unions, creditors, bond holders, dealers and suppliers.

INSKEEP: That's President Bush speaking this morning at the White House. NPR's Frank Langfitt is one of the voices we'll now hear on this story. He joins us now live. Frank, good morning.

FRANK LANGFITT: Good morning, Steve.

INSKEEP: "Meaningful concessions," the president says. What sort of concessions?

LANGFITT: Well, a lot of this, Steve, was in the bill that the House passed earlier and the White House had agreed to; so, a lot of what we're seeing now is familiar and should be familiar to our listeners. The union would have to get rid of that jobs bank that - where people are paid and they don't have to work.

INSKEEP: Paid when they're laid off, almost all their salaries.

LANGFITT: Exactly, paid when they're laid off. You see some interesting things; a lot of the healthcare is going to be offloaded to the union, but instead of getting a lump sum, the union will actually have to take stock for that, which could be very risky for the union. Right now, GM stock's only worth $4, could go a lot lower. You're also seeing, in terms of - this is very interesting - work rules have to be competitive with Toyota and with Nissan, places like that, by the end of next year. That could tear up the contracts. So, there are some pretty interesting concessions in here.

INSKEEP: Demanded for the unions and other people, or at least suggested, I guess, for the unions and other people, who and what will determine if the auto companies go far enough by March?

LANGFITT: It's a little unclear. You know, one of the things aligned here that we see is the firm will have to be deemed to have a positive net present value going forward, and what that means is that it has to really have value. But who exactly determines that? Presumably, President-elect Obama. But let me give you another example: Right now, if you look at Chrysler - Daimler, which used to own Chrysler, it has a share of Chrysler and it says Chrysler isn't worth anything now.

INSKEEP: No.

LANGFITT: So, presumably for Chrysler to go forward, it's going to have to do massive restructuring.

INSKEEP: NPR's Frank Langfitt, stay with us. We're going to bring in another voice. Paul Ingrassia is an auto-industry reporter, and he's become a regular guest on this program as this story has developed. Good morning to you, sir.

Mr. PAUL INGRASSIA (Automotive-Industry Journalist, Conde Nast Portfolio; Former President, Dow Jones Newswires): Hi, Steve. How are you?

INSKEEP: I'm OK, thanks very much. Based on what you've heard so far, does this plan seem to point the way to a recovery for the automakers?

Mr. INGRASSIA: Well, you know, Steve, in some of the articles I've written for Conde Nast Portfolio Magazine, I tried to outline some of the things that would need to be done, and some of these things could be done under this - under what President Bush outlined today. I mean, basically what you need is the - the desperate equity swap is good. In other words, bond holders will have to convert some of their bond interests into equity in the companies...

INSKEEP: If they go along, right? I mean, you have to negotiate with them to get them to agree to take this stock that might not be worth much.

Mr. INGRASSIA: Well, that's the issue: What's the enforcement mechanism here? I mean, I think, Frank said it just perfectly, you know, who's going to enforce this? Well, he said it's a little unclear, and that's the problem. It's unclear, you know - what is clear is that after the Obama administration takes office, that basically every constituency group in the auto industry will be lobbying to reshape this package in a way that - or to interpret this package in a way that minimizes the, quote, "pain" on its shelves. So, you're basically opening this up to the whole political lobbying process in a big way.

INSKEEP: Frank Langfitt?

LANGFITT: Yeah, I want to follow up on what Paul just said, because there's another thing here that jumps out when you look at the terms, and I think he's really getting at it. These terms are actually non-binding; that's a really powerful word. It means it's giving a lot of wiggle room to President-elect Obama and, presumably, the car companies, and it says the car companies, you know, if they have reasons to deviate from this and they can still show that they can make changes and still be viable, that they can still, you know, get this money. So, there - it seems, if you read it just now, that there's a pretty big loophole here.

INSKEEP: But wait a minute, gentlemen. Doesn't this actually give a lot of flexibility, but also a lot of power, to the next administration? Because, I mean, the car companies can figure out some way that seems to make sense for them, but the next president, President Obama, can say - if he chooses to say so - look, guys. I can call this loan. I'm not satisfied. I will force you into bankruptcy. You bond holders will lose your money. Everybody's going to lose their money in that circumstance. Isn't there some leverage here for the administration?

LANGFITT: Well, going forward, it's going to be really interesting to see what President-elect Obama does. I mean, I think that this gives him - it doesn't hem him in, and it does give him those powers. If he calls in the loans, I mean, if he does force this, of course there's the question about American taxpayer money. We will have already put a lot of money into this, and then we'd have to get it back through bankruptcy.

INSKEEP: Ah. Paul Ingrassia?

Mr. INGRASSIA: Well, the issue is, basically, leverage exists only if you choose to use it. It's far from clear that the Obama administration will choose to be tough enough with the various powerful constituency groups - ranging from bond holders to the union to dealers - to really enforce terms. So, the most likely outlook, I'm afraid, is, you know, that the theme song could be "We Shall Muddle Through."

INSKEEP: Hm. One other thing, Mr. Ingrassia, I'll give you the last word in a few seconds. Do you think there is room in this economy for three automakers to survive, U.S. automakers?

Mr. INGRASSIA: No, I think Chrysler is going to have to be sold, probably in parts; you know, Jeep's a valuable franchise to a foreign buyer. But the other issue here - I think we all agree on this - is that no matter what the government does in terms of these, you know, restructuring terms, which is very important, someone's got to get the economy stimulated to the point...

LANGFITT: Right.

Mr. INGRASSIA: Where people are going to start buying cars again.

INSKEEP: Mr. Ingrassia, thanks very much.

Mr. INGRASSIA: Thank you.

INSKEEP: Paul Ingrassia of Conde Nast Portfolio, also NPR's Frank Langfitt. Frank, thanks very much to you.

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