Republicans Propose Alternative Rescue Plan to Detroit 3

Following the recent announcement that the United States Senate have put the Detroit 3 loan package on hold, members of the Senate already started looking for alternative solutions that could help domestic companies remain on the floating line. An interesting proposal came from Republican senator Bob Corker who issued a new funding program based on three major conditions (as provided by Autonews):

1. Detroit 3 companies would have to convert at least two-thirds of their creditors' debt to equity by March 31, 2009, or either repay the loans or file for bankruptcy protection.

2. UAW workers for the Detroit 3 would have to accept the same pay, benefits and work rules as employees of import-brand factories.

3. Half of Detroit 3 payments to UAW-administered health trusts for retired workers would be in stock, not cash.

The three giant car manufacturers did not comment Corker's plan, but the Senator admitted that he's currently in advanced talks with GM and Chrysler representatives. "Without the big stick of government -- and, by the way, the threat of bankruptcy -- they will never be able to force the bondholders to do the things that they need to do." However, GM representatives denied negotiations with the Republican senator, saying that “we're talking to quite a few senators. There a lot of work being done.”

Earlier this day, the United States Senate confirmed that Detroit 3's loan package has been put on hold after the two side did not manage to get through negotiations. But even so, US officials are confident that an agreement will be reached anytime in the near future.

“We’re hoping that the Democrats will continue to negotiate but I think we have reached a point that labor has got to give. If they want a bill they can get one,” Senator Richard C. Shelby of Alabama was quoted as saying by the New York Times.