RESOURCE_RESEARCH PAPER#2_Big_3_Autobailout_During_a_2008_Reccesio.docx - Elizabeth Haro David Hu Should the federal government have bailed out the

RESOURCE_RESEARCH PAPER#2_Big_3_Autobailout_During_a_2008_Reccesio.docx

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Elizabeth Haro David Hu Should the federal government have bailed out the American automobile industry? A Pro Perspective. Abstract/ Executive Summary During the 2007 to 2008, a global financial crisis has struck the world economy. General Motors and Chrysler asked the United States Government for bailout funds in order to avoid Chapter 11, Title 11 of the United States Code of bankruptcy. While General Motors and Chrysler asked for bailout funds, Ford requested a non-bailout loan to renovate environmental friendly facilities and create more fuel-efficient vehicles. The bailout loan was granted by President George W. Bush towards the conclusion of his presidential term and forwarded this inheritance toward the successor, President Barack H. Obama. On May and June 2009, Chrysler and General Motors filed for Chapter 11, Title 11 of the United States Code of bankruptcy due insufficient vivable plans. During the restructuring process, the Federal Government continued to allow Chrysler and General Motor to receive bailout funds. General Motor received forty-nine point five billion dollars in late 2008, Chrysler received about seven point five billion dollars, and Ford (did not received any TARP loans) received in five point nine billion dollars in Department of Energy’s Advanced Technology Vehicles Manufacturing (ATVM) Loan Program funds (Department of Energy, 2014). Part of the Benefits of the bailout loans was it helped in reducing the unemployment rate, restructuring compensation rates to a competitive pay, prevent a further burden of the legacy cost, and change the Big Three manufacturing habits to more fuel efficient vehicles. In the end, Chrysler had repaid most of the TARP bailout funds as of 2011, General Motors had repaid most the bailout TARP funds as of 2013, and Ford continues to repay their Advanced Technology Vehicles Manufacturing (ATVM) Loan in quarterly installments till 2022. The bailout was a successful intervention, it not only help these businesses, but also restore the automobile reputation, part of the economy and the labor force in these companies. Introduction
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The Financial Crisis of 2007-2008 had endangered many financial intuitions to the face of collapse. Many of the real estate sectors have seen many homes gone to evictions, foreclosures, consumer spending was reduced, and prolongs unemployment. Following the years of late 2008, a global scale economic recession struck the United States. The economy was failing, credit was slim, and new vehicle sales were nearly nonexistent. The big three automobile manufacturing businesses Ford, General Motors, and Chrysler market shares had declined from seventy percent back in 1997 to fifty- three percent in 2008 (Klier, 2009, pg. 1). These American automobile businesses were profitable since 1955 till the Vietnam War, Gulf War, and the Iraq War (Klier, 2009, pg. 1). General Motors and Chrysler were burning up their cash assets and on the verge of facing Chapter 11, Title 11 of The United States Code of Bankruptcy in the matter of weeks. Bankruptcy would damage the automobile manufacture reputation and it would give consumers a sense of consumer disloyalty. On November
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