U.S. Motor Vehicle Industry: Federal Financial Assistance and Restructuring [January 30, 2009] [open pdf - 839KB]
"This report focuses on the current situation faced by the Detroit 3, key aspects of their current crisis, including possible consequences of a failure of one or more companies, and some aspects of legislative actions that have been considered to bridge their financial conditions to a more stable situation. The subjects covered are: The impact of the automotive industry on the broader U.S. economy and of potential failure of the Detroit 3 companies; (2) Financial issues, including the present conditions affecting credit for automotive consumers and dealers, and legal and financial aspects of government-offered loans to the industry; (3) The current situation in the U.S. automotive market, including efforts in 2007 by the Detroit 3 and the United Auto Workers union (UAW) to address problems of long-term competitiveness; (4) Issues related to government assistance, and various forms of bankruptcy, should this assistance fail to lead to longer term recovery; (5) Legacy issues, specifically pension and health care responsibilities of the Detroit 3; and (6) Stipulations that have been imposed on auto manufacturers as conditions of assisting in their restructuring. Before reviewing these aspects of the situation and specific policy questions, the report will summarize the developments of December 2008. During the month, Congress considered aiding the Detroit 3, but was unable to agree on a plan to assist the companies. Deciding it was necessary to avoid a 'disorderly collapse' of the Detroit 3, President Bush announced on December 18, 2008, a plan to aid the two companies closest to immediate bankruptcy, GM [General Motors] and Chrysler, using TARP [Troubled Assets Relief Program] funds already appropriated by Congress."
CRS Report for Congress, R40003
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