[Toshi]

aka "Auto Industry Financing and Restructuring Act’’.

http://graphics8.nytimes.com/packages/pdf/business/autobilldraft.pdf

more here as i read and parse it. here's the reporter's pre-draft take on it: http://www.nytimes.com/2008/12/09/business/09auto.html?_r=1&hp

 

[Toshi]

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.

 

[Toshi]

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.

 

[Toshi]

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.

 

[rockwool]

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

Only in America.

What is CARB, and what are they upto?

Explain this auto czar thing/guy.

 

[stoney]

Only in America.

What is CARB, and what are they upto?

Explain this auto czar thing/guy.

Clean Air Regulatory Board. California has generally horrible Air quality. carb is our solution, higher standards for cleaner air and better emisions.
The manufacturers sued because it is not profitable to make cars more efficient.

Czar is a bad word choice. It's basicaly a Automotive Secretary.

 

[Secret Squirrel]

Czar is a bad word choice. It's basicaly a Automotive Secretary.

I'm guessing that this will turn out about as rosy as the Drug Czar?

:huh:

 

[Samirol]

Only in America.

What is CARB, and what are they upto?

Explain this auto czar thing/guy.

it means that they get to regulate themselves

 

[Toshi]

Only in America.

What is CARB, and what are they upto?

Explain this auto czar thing/guy.

Clean Air Regulatory Board. California has generally horrible Air quality. carb is our solution, higher standards for cleaner air and better emisions.
The manufacturers sued because it is not profitable to make cars more efficient.

Czar is a bad word choice. It's basicaly a Automotive Secretary.

close: it's the California Air Resources Board. much more info at the wiki link - clicky clicky. the cliffs notes are that CARB sets higher standards for air quality and famously mandated a certain percentage of cars be electric -- this is the reason why we had/have the Toyota RAV4EV, the GMC S10 Electric, and the famous GM EV1. these higher standards are adopted by numerous other states, 19 off the top of my head. here is the page on CARB's site talking about their automobile regulation plan: http://www.arb.ca.gov/cc/ccms/ccms.htm

the EPA under Bush took the unprecedented step of not granting California a waiver that they would need to implement these regulations, and the automakers have joined in by filing suit in these other states with the intent of blocking the CARB regulations.

i think czar is a fair term:

- they get to renegotiate contracts if they deem the automakers have failed to do so
- they get to veto any transaction they wish
- automakers are bidden to report any transaction > $25 mill to them
- they are the arbiter, at least initially, of whether the companies are compliant
- they can withhold money or ask for earlier repayment

that said this is still draft legislation with the hurdles of the legislature and the white house to surmount, but it's a start. some elements make me scratch my head (provisions for building buses and rail cars in SUV factories, mandating the selling of the planes) but some seem like good ideas. all in all it's still a judgment call on whether the industry can survive, and this doesn't really fundamentally change that calculus. the restructuring plans will be what effect the necessary changes.