Detroit Big 3: An Unexplored Solution That Needs No Federal Cash

This is the last few paragraphs of a long article I posted at Dailykos yesterday. While parts of the article got some comments none of them realized this was the most important part of the entire piece. I urge you to read the entire article as it set the stage for this comment and proposal.

A Solution Unexplored

The Congress should have been in furious discussion with all the Wall Street firms and Banks that received hundred’s of billions of dollars to form a syndicate, as they routinely do, and offer the needed credit facility/equity investment agreement to Detroit. It is the lack of this credit/equity investment for the car makers, the dealers and the consumer that has lead us to the brink of a possible financial catastrophe.

Why wasn’t the obvious move started in November? Why weren’t the CEO’s of these Wall Street firm’s called to a meeting in Washington and slapped upside the head by all, repeat all, the leaders in Congress? I don’t know.

Yet there is time between Jan. 20, 2009 and March 31, 2009 to accomplish that very task. Banks, investment companies and Wall Street conduits could put together a longer term credit/equity facility that addresses all the issues on the table: Operating capital, dealer financing and realistic consumer financing so people can buy and lease vehicles. These types of multi-lender/equity investor syndication’s are routine in the financial world. With truly large projects a single lender/investor would not take all the risk. That risk would be spread around by taking in other partners.

Why hasn’t a syndicated lender/equity investment plan happened with the Big 3? The Congress hasn’t tried. It’s a viable plan. Someone should at least try and make it happen.

In thinking about this overnight, the only government involvement might be to offer asset/loan guarantees to the syndicate. Since we’ve already offered $307 billion in guarantee’s to just one firm on Wall Street I would think this would be a no-brainer.

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