No loans for the automakers, says White House

Obama bows to Main Street

Finally, the verdict has come out and President Barack Obama has said a big ‘no’ to any kind of payday loans to the troubled automakers. Considering the fact that General Motors and Chrysler are surviving on the bailout money that they received in December 2008, their latest requests for another round of bailouts were definitely nothing less than payday loan applications.

But the Obama administration has shattered their hopes by stating that both the auto makers have not done enough to save themselves since the last bailout. However, the underlying truth is that the government has actually bowed down to Main Street standing against Wall Street at the moment.

Taxpayer’s outrage

Opinion polls conducted after President Obama gave more time to GM and Chrysler, for restructuring themselves to be able to justify the additional investment of taxpayers’ money, had clearly suggested that the majority of the Americans were strictly against funding the US automakers any further. Many even opined that if the government goes ahead with the plan, it would be like cheating the taxpayers.

A CNN/Opinion Research Corp. poll conducted prior to the news of Rick Wagoner’s exit under White House pressure had revealed that 49% of the respondents were against Obama’s auto plans compared to 46% who supported it. Whether the government expresses it or not, such outrage has definitely worked somewhere or the other leading the government to deny yet another round of virtual payday loans to the automakers.

What Obama wants

Rejection of GM and Chrysler’s plea for additional aid clearly suggests that the last minute arrangements made by the two automakers have failed to impress the government. Perhaps the top brains sitting in Detroit have not understood until now what Obama wants?

Meanwhile, to cut their task short, Mr. President has said on the CBS program ‘Face the Nation’ that without any ambiguity he certainly wants to keep the US auto industry alive, “But it’s got to be one that’s realistically designed to weather this storm, and to emerge at the other end much more lean, mean and competitive than it currently is.” And this actually means, “Sacrifices from all parties involved — management, labor, shareholders, creditors, suppliers, dealers. Everybody is going to have to come to the table and say it’s important for us to take serious restructuring steps now, in order to preserve a brighter future down the road.”

Detroit’s last hope

Despite the rejection, Obama has still left a trail of hope for both GM and Chrysler, who had applied for $30 billion and $9 billion respectively to see through the worst time for the automakers in the last 30 years. The government has now given 60 days and 30 days to GM and Chrysler respectively to prove that they are worthy enough to get a chunk of the taxpayers’ money.

This means, it is the last chance for both of the auto giants to understand that now if they fail to act fast and accurate, their last hope to get official payday loans will be destroyed leaving just one option for them, filing for bankruptcy.