12-08-2008, 05:21 PM
Join Date: Aug 2005
2007 Land Cruiser
Draft text of the auto bailout legislation
aka "Auto Industry Financing and Restructuring Act’’.
PDF of the draft legislation as published by the NY Times: http://graphics8.nytimes.com/package...obilldraft.pdf
read it for yourself! for the somewhat lazier here are my own Cliffs Notes after taking a look at it:
sec 3a establishes the so-called "auto czar".
sec 5b2 calls for reviews of restructuring planning progress at 45 days (conveniently after the bush-obama switchover since the clock starts ticking jan 1, i believe).
sec 6(3)b calls for a long term restructuring plan to be submitted by march 31, 2009 (with 30 days of wiggle room at the auto czar's discretion). this explicitly mentions debt restructuring and debt-to-equity swaps.
sec 9a1 names the funds to be used as the DOE funds that were supposed to go to produce greener cars save for $500 million that will be used for the original purpose. not cool. however, continued applications (such as from Tesla) are still accepted per sec 9a3.
sec 10 covers loan duration and rates: 7 years. 5% for the first 5 years, 9% thereafter. one of the "openness" conditions is the requirement that all transactions over $25 million be reported to the govt overseer. the auto czar has the ability to veto "any asset sale, investment, contract, commitment, or other transaction [described elsewhere]".
sec 10 continues with the penalties for failing to abide by the restructuring plan or failure to submit such a plan by march 31, 2009: the auto czar may take the money and run, essentially, or call for early repayment as he sees fit.
the last paragraph of sec 10 mandates that automakers withdraw their lawsuits against states that are attempting to enact stricter greenhouse gas standards. this means california and all the states that follow CARB's lead! this is a good thing.
sec 11 covers the collateral: warrants or their equivalents for 20% of the amount lent, at the 15-day average price going backwards from dec 2, 2008.
also in sec 11 are the limits on executive pay: a vaguely worded ban on "golden parachutes" (yes, they actually say exactly that); no bonuses or incentive pay for the top 25 paid execs in each company until loans are repaid; a ban on owning or leasing any corporate aircraft (hah).
sec 11 goes on to prohibit dividends for extant stock and establishes bailout loans to have first priority for repayment.
sec 13 is kind of interesting: calls for manufacturers to assess whether their now-idled excess production capacity could be utilized for production of bus and rail cars.
sec 14 covers reporting: the auto czar will report to congress 30 days after initial disbursement and then every 90 days with updates.
sec 15b4c says that congress may take matters into its own hands and renegotiate contracts on behalf of the automaker per the plan laid out by the auto czar if the manufacturer is unable to negotiate a tenable plan on its own. this is the money section, so to speak.