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GM WATCH CONTINUES
In late breaking news Dylan Ratigan reveals that Senate Democrats are preparing a bill to rush financial aid to auto makers.
They intend to press ahead with their plan to direct $25 billion from the $700 billion financial rescue to Detroit's Big Three despite resistance from Republicans.
As part of the plan, Senate Democrats are proposing to deny bonuses to U.S. auto executives making more than $250,000 a year. Also, the auto companies would first have to give the government a plan for "long-term financial viability" before receiving the aid.
The measure also would extend jobless aid to unemployed workers whose benefits have run out. And the loans would start at a 5 percent interest rate.
Strategy Session with the Fast Money Traders and Larry Kudlow
The traders all wish lawmakers were putting more stipulations on the money. They say:
This is just a nice way of saying they’re not handing away money, but that’s exactly what they’re doing, says Tim Seymour. They’re handing it away.
It’s hard to hear, adds Pete Najarian. It makes me irate.
Our politicians failed us in getting us into this mess and without any kind of stipulations on the money, they fail us again, says Dylan Ratigan.
At least they’re putting a ceiling on the bonuses, adds Najarian. It’s more than the banks did.
As I understand this aid package the $25 billion is for the entire industry, says CNBC’s Phil LeBeau, not just General Motors [GM
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I understand that there will be no bonuses for executives making over $250,000 but viable business plans for the future. What does that mean, adds LeBeau.
Meanwhile, cash-strapped General Motors Corp. says it will delay reimbursing its dealers for rebates and other incentives later this month, an indication that the company is starting to have cash-flow problems.
Should GM Declare Bankruptcy?
The heads of the Big 3 automakers head to Washington DC again on Tuesday for the first of two hearings. First they will meet with the Senate Banking Committee to make their case for government money.
Instead of having Congress try and figure out who to save they should say “we don’t have enough money to save all 3 of you. Knowing that, come back with the absolutely best plan and we’ll make some decisions,” counsels Karen Finerman. That would light a fire under them.
Larry Kudlow advocates allowing the Big 3 to file for bankruptcy but in a very controlled way. His idea gets a lot of push-back from the traders and Phil LeBeau.
Will people buy cars from a bankrupt entity if GM declares bankruptcy? asks Guy Adami.
If that happens a Chapter 11 could turn into a Chapter 7 and that’s not a chance anyone wants to take, adds LeBeau. If you let GM goes bankrupt it will cease payments to suppliers and that will create a cascade of bankruptcies and the industry could very likely collapse.
The Bottom Line
Several aides and lobbyists say, right now, it doesn't look like Democrats have the votes to be able to get the $25 billion through Congress.
That's because the current White House and congressional Republicans say the aid money should come from redirecting a $25 billion loan program that Congress approved in September.
That was to help the industry develop more fuel-efficient vehicles.
It's also worth noting that according to the legislation, 355,000 U.S. workers are directly employed by the auto industry and an additional 4.5 million work in related industries. That doesn't count the 1 million retirees, spouses and dependents who rely on the firms for retirement and health care benefits.
We'll be watching.
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Trader disclosure: On Nov.17, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Pete Najarian Owns (ETFC); Pete Najarian Owns (MOS) And Is Short (MOS) Calls; Pete Najarian Owns (SCHW) And Is Short (SCHW) Calls; Pete Najarian Owns (CVX) Put Spread; Pete Najarian Owns (ADM) Call Spread; Finerman's Firm Owns (MSFT); Finerman's Firm Owns (OIH) Puts; Finerman's Firm Owns (ROH) Calls; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (RTH), (USO), (BBT), (COF), (VNO); Seymour Owns (AAPL), (BAC), (ETFC), (F), (INTC), (MER); Seymour Is Short (TM)
Jon Najarian Has A Long Call Position In (LOW); Jon Najarian Has A Long Call Position In (INTU; Jon Najarian Has A Long Call Position In (LTD)Charles Schwab Is A Sponsor Of "Fast Money"
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