Car Loans For the GM and Chrysler

Good news for the Motor City and the auto makers. The House passed a bailout bill that provides a $14 billion loan to GM and Chrysler. The move should keep them out of bankruptcy until March 2009. But Republican opposition in the Senate threatens it's approval.

There is tremendous controversy by Americans on whether the auto industry should be bailed out. This step seems to be a compromise since the aid is in the form of a loan that must be repaid.

The vote was make based on an agreement earlier in the day between Democratic Congressional leaders and the Bush administration.

The measure passed by a count of 237 to 170 thanks to overwhelming Democratic support. But only 32 Republicans joined Democrats in voting for the bill.

Eight of those Republicans are from Michigan, joining the six Democrats in the state's delegation in voting for the measure.

A ninth Michigan Republican, Timothy Walberg, did not vote. Seven other Republicans that voted for the bill are from nearby Midwestern states that are also home to auto plants. But outside of the auto belt, the bailout had little Republican support.

Senate rules would allow the Republican minority to block or even kill the legislation. And even with the support from the White House, Republican anger seemed to grow throughout the day.

During the House debate, Democrats and Republicans from Michigan both expressed heavy support for the bailout. But virtually all other Republicans who spoke during the debate argued that it would not solve the problems dogging the industry.

GM has said it needs $4 billion by the end of the month to continue operations, and believes it'll need an additional $6 billion in the first three months of 2009. Chrysler has said it needs $4 billion by the end of the first quarter.

Ford Motor (F, Fortune 500), which has more cash on hand than its U.S. rivals, is not expected to tap into this bailout in the coming months.

Bill Details
The cash infusion is designed to keep the automakers solvent until the new adminstration can design a longer-term solution. In effect, the measure allows the automakers to negotiate with creditors and the United Auto Workers union on additional concessions needed to stem their ongoing losses.

The bills also allows "big brother" to oversee operations and limit financial payments to executives and prohibit golden parachutes to their top executives.

So the saga continues. This is by no means a done deal. Expect to see some arm twisting and cut throat negotiating in the Senate in the next few days.