Auto bailout collapse: the affected parties

13 December 2008

A lot of stakeholders, besides the obvious ones of the automakers themselves, have been adversely affected by the US Senate's rejection of the Bush administration's bailout plan for the beleaguered sector (See: Senate rejects $14-billion bailout plan for auto majors).

These include the powerful employee unions, auto parts manufacturers, and Wall Street elements, already affected by the worst fraud perpetrated by one of their kind. (See: Former NASDAQ chairman charged with $50-billion securities fraud)

The Republican opposition in the Senate is being seen as the manifestation of the deep-rooted prejudice conservative members of the party have against organised labour. Such antipathy to unions was an undercurrent through the weeks of negotiations leading up to Thursday's Senate vote rejecting the plan.

Handing a defeat to labour and its Democratic allies in Congress was also seen as a preemptive strike in what is expected to be a major battle for the new Congress in January; the unions' bid for a so-called card check law that would make it easier for them to organise workers, potentially reversing decades of their declining power. The measure is strongly opposed by business groups.

The United Auto Workers (UAW), which represents about 150,000 employees of the Big Three of American auto, delivered campaign contributions and foot soldiers to help elect Democrat Barack Obama as president, especially in crucial states such as Michigan and Ohio.

The anti-union sentiment rose to the surface in the final desperate hours of negotiations. Republicans insisted that the UAW agree to cut its wages to be competitive with foreign companies such as Honda, Toyota and BMW by a set date. UAW officials and their Democratic allies balked, saying the autoworkers were being told to make sacrifices that had not been demanded of other industries receiving government bailouts.