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 .
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.