Bailout in store for the Big 3?

Executives from Ford, GM, Chrysler and the United Auto Workers Union descended on Washington and testified before the the Senate Banking Committee today. The discussion was one of the financial situation that lays before the three American automakers.

They are looking for an additional $25 billion funding to lift the current burden that the financial worlds collapse has leveled upon them. Earlier this year, Congress authorized a $25 billion loan program focused on assisting the companies with retooling for the implementation of fuel-efficiency technology.

GM’s best option currently would be following through with chapter 11 filings, which would allow them to re contract with the nearly 7,000 dealers that they have stretched about the united states.

With the current credit lock down in place the Big 3 have little chance of moving enough units to make them profitable. Out of the 3 only Ford and Chrysler are properly positioned to return to profitability with in the next 18 to 24 months. Return? become would be more appropriate. It has been a long time since any of the 3 were profitable in truth. Ford had just started to move into profitability during the first quarter of this year. Just in time for the credit market to shut down any chance of maintaining the gambit.

But the chances of the Big 3 tagging themselves onto the TARP program are slim to none and the chance of them establishing another so-called bailout are not good. The Senate Republicans and the White House stand united against such a plan.

Fed Cuts Rate Again

The Fed cut the key interest rate from 1.5% today to 1%. A half point reduction in yet another attempt to jump start the economy. The Federal Reserve cut the rate earlier this month from 2% to the 1.5% rate on the 8th of October. As the Markets close today it does not appear to have had the effect everyone had hoped.

Federal Reserve Chairman Ben Bernanke pledged that those at the Federal Reserve would “monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.” but it appears that Americans have little faith in the group that was watching from the sidelines as our financial infrastructure crumbled earlier on this year to save the day now.

At the end of the days trading, the DOW closed down just over 74 points however the NASDAQ was up 7.74 or almost a half percent.

With just less than a week to go until election day in the United States, one wonders what more of a roller-coaster ride we can look forward to.