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The Biggest Problem Detroit's Big Three Face

First, if "too big to fail" is the new mantra...the new battlecry, then Congress should enact legislation that would DIScourage growing a company such that is becomes "too big to fail". And, Congress should pass legislation that is designed to ENCOURAGE a divestiture of existing "too big to fail" companies over a ten-year period. And, Congress shuld pass legislation to STOP the many mergers that are now going on in the financial sector, producing even MORE companies that are "too big to fail"

Second, Congress should explain why certain industires and certain "size" companies are being singled out for "special consideration". It smacks of a payback to the UAW. Why not money for retail and for every other commercial endeavor? Where does it all stop? When?

Third, unless/until a bankruptcy judge gets involved IN ADVANCE of any bailout or loan, there is no way for the taxpayer to be #1 in line. Secured creditors remain secured. And, with GM already owing $56 BILLION more than it owns, well...think it through.

Fourth, GM's problems are older than the sour economy. Please review their sour balance sheet and Profit & Loss statement. Providing them $25 BILLION while they are losing $38 BILLION per year such as they did in 2007 won't even get them through one year.

Fifth, who will buy the vehicles they would produce with the $25 BILLION? With the economy down and no real end in sight, the $25 BILLION will do what, pay the light bills? Provide funding for the UAW JOBS BANK while all the INDIRECT jobs attributable are done for?

Sixth, Congress, including Barney Frank, Speaker Pelosi, et al, should explain how GM could EVER pay back the loan. Per GM's latest filing with the SEC, they are already bankrupt:

GM owes $56 BILLION more than they have. That's 56 BILLION in NEGATIVE equity:

finance.google.com/fin...

GM In MILLIONS:
Total Assets 136,046.00
Total Liabilities 193,016.00
Total Equity -56,970.00

Ford is not QUITE as bad:

finance.google.com/fin...

Total Assets 265,297.00
Total Liabilities 266,980.00
Total Equity -1,683.00

Why should we sustain companies that cannot even FULLY fund their pension liability? It's just MORE money down a rat hole, isn't it? Even if GM were to make a multi-BILLION dollar profit per quarter, do you honestly believe the UAW would sit still for that without a hand out for MORE? If we taxpayers are to be stuck like pigs, then there should be wage freezes at the executive level as well as at the hourly level until the taxpayer is repaid. The UAW and its members have as much to gain in this effort as the Big 3. Let them sign on as a co-guarantor.

In any event, if the taxpayer is going to be stuck, at least insist on NO wage increases, NO stock options, NO bonuses, NO pension plan increases, NO health care improvements and NO dividends until the taxpayer is FULLY repaid.

Now, what COULD be done? How about a $2,500 tax credit to any taxpayer who purchases (no leases) a NEW vehicle within 6 months, provided they have at least a $2,500 downpayment and can qualify for a loan? That helps anyone who desires to spend their money supporting the auto industry, not JUST the "Big Three".