Whitehouse Bailout for Automakers Announced

Bloomberg News is reporting the terms of a Whitehouse bailout for the automakers. Looks like $13.4 million immediately, with the promise of more in 90 days. There are stipulations on the deal and they look good:

—Firms must provide warrants for non-voting stock.

—Firms must accept limits on executive compensation and eliminate perks such as corporate jets.
—Debt owed to the government would be senior to other debts, to the extent permitted by law.
—Firms must allow the government to examine their books and records.
—Firms must report and the government has the power to block any large transactions (> $100 M).
—Firms must comply with applicable Federal fuel efficiency and emissions requirements.
—Firms must not issue new dividends while they owe government debt.

Targets: The terms and conditions established by Treasury will include additional targets that were the subject of Congressional negotiations but did not come to a vote, including:

—Reduce debts by 2/3 via a debt for equity exchange.
—Make one-half of VEBA payments in the form of stock.
—Eliminate the jobs bank.
—Work rules that are competitive with transplant auto manufacturers by 12/31/09.
—Wages that are competitive with those of transplant auto manufacturers by 12/31/09.

Politico has more information. Probably the best part is that Cerberus Capital won't be able to sell off Chrysler without Congress reviewing the terms. Chrysler has a bone-stupid product line, but a change in management would cure that.