Highlights of the Auto Bailout Bill

DETROIT - Read all 31 pages of the "discussion draft" of the House of Representatives' bill "to authorize financial assistance to eligible automobile manufacturers, and for other purposes, in Adobe PDF format, HERE

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• Up to $25 billion will come from the short-term section 136 money of the Energy Act, designated for fuel-efficient technology.
• The loans are due in seven years.
• Interest rate is 5 percent for the first five years; 9 percent for the remaining two years. No prepayment penalty.
• The president will designate one or more Executive Branch officers to carry out the purposes of the bill (the so-called "car czar" or board). He/she will authorize and direct the disbursement of bridge loans, or loan guarantees, to General Motors, Chrysler LLC and Ford Motor Company.
• The car czar can look over the books of any automaker receiving the funds, or of any ownership interest holding at least 50 percent of the automaker. We're looking at you, Cerberus.
• The car czar may prohibit an automaker from consummating a proposed sale, investment, contract, commitment or other transaction. We're looking at you, Chrysler. And no fair buying exotic sports carmakers, GM or Ford.
• They're prohibited from suing any state over laws concerning greenhouse gas emissions standards. See California and 16 states.
• The federal government will hold warrants, which assures we get paid back before shareholders receive dividends. That's GM and Ford.
• Chrysler gives "a warrant for common or preferred stock, or an instrument that is the economic equivalent" of Chrysler or Cerberus.
• Executive compensation: No dollar amounts. Executives cannot take "unnecessary and excessive risks that threaten the value of" manufacturing, bonuses or compensation based on performance later found to be inaccurate, and no golden parachutes.
• No ownership or lease of private aircraft for the duration of the loan.
• By January 1, 2009, the car czar/car board will determine how to measure progress based on the plans they submitted to Congress on December 2 in order to "transform" assistance into long-term assistance.
• The car czar must evaluate the automakers' development toward restructuring every 45 days.
• The car czar must report to Congress every 15 days on progress to negotiate restructuring plans for each automaker receiving money.
• By March 31, each eligible automaker must submit to the car czar a long-term restructuring plan for the long-term viability and international competitiveness, resulting in repayment of the financing and ability to comply with all federal and state fuel efficiency requirements, and commencement of advanced technology vehicle manufacturing, as required in the 2007 Energy Bill.
• Also due by March 31; plans for new and existing products and capacity.
• They must submit plans to make profits.
• They must submit plans to rationalize costs, capitalization and capacity with respect to manufacturing workforce, suppliers and dealerships.
• They must submit plans to restructure existing debt.
• They must show a product mix and cost structure that is competitive in the U.S. marketplace.
• Once their long-term restructuring plans have been approved, the car czar may provide long-term financial assistance.
• The car czar can determine which automaker gets money first, based on need and the effect of each automaker's failure.