The White House is considering a managed bankruptcy of GM and Chrysler.

The White House is considering a managed bankruptcy of GM and Chrysler.

The White House is considering a managed bankruptcy of GM and Chrysler.

A summary of what's in the major U.S. newspapers.
Dec. 19 2008 6:46 AM

White House Might Push Bankruptcy on Automakers

The New York Timesand Washington Postlead with the White House announcement that it's considering forcing an "orderly" bankruptcy of Chrysler and General Motors. In announcing that the administration was "very close" to reaching a decision on the automakers, the White House press secretary acknowledged that officials are considering a managed bankruptcy as an option. But both papers hear from administration officials that bankruptcy is unlikely and is seen more as a last resort option that would become a reality only if no agreement can be reached with the automakers. The Wall Street Journalleads its world-wide newsbox with word that President-elect Barack Obama will nominate Rep. Hilda Solis of California, a free-trade skeptic, as his labor secretary and Ron Kirk, a champion of free trade, as his trade representative. The picks illustrate how the Democratic Party is split in the battle over free trade.

USA Todayleads with a look at how mortgage rates have fallen to lows not seen since the 1960s. The average 30-year fixed-rate mortgage fell to 5.19 percent this week, the lowest it has been since Freddie Mac started to issue its weekly mortgage market survey in 1971. While the low rates don't appear to be motivating new buyers just yet, they have led to a surge in refinancing, which tripled in the past month. Experts say homeowners should act now because rates aren't likely to get much lower. The Los Angeles Timesleads locally and goes high with news that federal regulators have adopted sweeping new rules for the credit card industry. The rules, which take effect in July 2010, would forbid credit card companies from increasing interest rates on existing balances and require a 21-day grace period before late fees could be charged. Some worry that these new rules could lead banks to tighten credit during a recession, but consumer advocates insist more regulation is needed to address the unfair and deceptive practices that have become increasingly common in the industry.

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When the possibility of a bankruptcy became big news—and GM's shares took a dive—after it was mentioned in the morning news conference, the White House came back in the afternoon to emphasize that it's merely one of the many alternatives that are being discussed. The WP says that while President Bush has frequently been following Treasury Secretary Henry Paulson's lead during the financial crisis, things will be different with the automakers. Bush is apparently being presented with all the options and will make the final decision. As of now, officials are optimistic that they'll be able to extract concessions from the automakers without going to bankruptcy court. The mere mention of bankruptcy came as a surprise to GM officials, reports the NYT.

Although no one mentions it explicitly, raising the possibility of a bankruptcy could have merely been part of a negotiating tactic to get more concessions out of the automakers, who have repeatedly said they don't see Chapter 11 as a viable option. The NYT states that if the automakers' unions feel they can get a better deal from President-elect Barack Obama, "they are likely to stall negotiations and settle for a shorter-term loan." But the WP says Obama's transition team has been in close contact with the Bush administration throughout the discussions and generally agrees on what to do about the automakers.

The WSJ points out that the future of the automakers "appeared to be increasingly tied to their weakened financing arms." One possibility for restructuring involves a change in the ownership stakes of GMAC, which is currently divided between GM and an investor group led by Chrysler's parent, Cerberus.

Remember how yesterday's WSJ said that Chrysler and GM had reignited merger talks? It now looks like that's not true. The NYT reports that a GM spokesman said the two companies haven't held any talks since late October. The WSJ mentions this denial in the last sentence of its story about the ongoing discussions over the automakers' rescue. This marks the second time in as many days that the WSJ has taken back the crux of one of its stories in an understated fashion. Yesterday, the WSJ announced in its corrections box that, contrary to what it had claimed a day earlier, the timing of the arrest of Illinois Gov. Rod Blagojevich wasn't affected by an article in the Chicago Tribune, according to a spokesman for the FBI. Of course reporters can make mistakes, but when new information contradicts the main point of an article, shouldn't the paper devote more than a few words in a corrections box or at the end of a story to set the record straight?

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Everyone gives big play to former president Bill Clinton's release of the list of donors to his foundation. The list reveals that, by the WP's calculation, Clinton has received between $75 million and $165 million from foreign governments and state-sponsored agencies. The list of more than 200,000 patrons who have given almost $500 million included several that could raise a number of potential conflicts for Sen. Hillary Clinton if she's confirmed as secretary of state. Saudi Arabia and aid agencies in Australia and the Dominican Republic gave somewhere between $10 million and $25 million, while a number of other countries, including Brunei, Kuwait, Qatar, and Taiwan, gave more than $1 million each. Among the donors is also a businessman with close ties to a former military ruler of Nigeria, a convicted class-action lawyer, and an aluminum trader who is the subject of a federal grand-jury investigation.

The former president had always refused to release his donor list, but did so after Obama made it a requirement to nominate his wife as secretary of state. Although most of his biggest contributors were already known, the amounts they donated had never been disclosed. Assuming Clinton becomes secretary of state, the former president will have to disclose any new donations once a year and would submit donations for review by ethics officials in the State Department. But as the WSJ notes, it's less than clear what kind of obligation the former president would be under to reject donations that the State Department rules might be inappropriate.

The WP off-leads, and the WSJ mentions, word that Obama's team is crafting a stimulus package that could reach $850 billion in spending and tax cuts over the next two years. The current plan that is being worked on would be worth between $670 and $770 billion, but aides say it could quickly reach $850 billion, or about 6 percent of the nation's economy. Obama's team is apparently working hard to keep the package below the trillion-dollar mark, but even $850 billion might prove too large for many lawmakers. Although many economists say an effective stimulus package has to be close to $1 trillion, House Democrats say that the more fiscally conservative members of their party will refuse to support anything beyond $600 billion.

The WSJ's Gerald Seib says Obama is "giving the country two administrations for the price of one." While Obama's first round of high-profile appointments were heavy on Washington veterans who are seen as largely moderate, the second wave include "the kind of folks who look like the fabled 'agents of change' promised in the campaign." These newer faces are concentrated in areas of energy and the environment, signaling that's where Obama wants to implement changes, while he stuck with known commodities in the economics and national security fields to signal continuity in a time of war and an economic crisis.

The NYT,LAT, and USAT manage to include late-breaking news that W. Mark Felt, better known as "Deep Throat," died yesterday. Felt was the FBI's associate director during the Watergate scandal and became "the most famous anonymous source in American history" ( NYT) when he helped guide the WP's Pulitzer Prize-winning investigation into the break-in and conspiracy that brought down President Richard Nixon. When Felt decided to identify himself as Deep Throat in Vanity Fair, he ended a mystery that had kept people guessing for more than 30 years. He was 95.

With all the recent talk about Caroline Kennedy's interest in the New York Senate seat, the WP's Charles Krauthammer reminds us that the daughter of John F. Kennedy isn't "alone in her sense of entitlement." In a plan that is eerily similar to what JFK did with his Senate seat when he was elected president, Vice President-elect Joe Biden's seat will be filled by a previously unknown person who everyone knows was put in place to keep the spot free for two years until Biden's son returns from Iraq. "In light of the pending dynastic disposition of the New York and Delaware Senate seats, the Illinois way is almost refreshing," writes Krauthammer. "At least Gov. Rod Blagojevich (allegedly) made Barack Obama's seat democratically open to all. Just register the highest bid, eBay-style."

Obama defended the choice of megachurch pastor Rick Warren to deliver the invocation at his inauguration, saying that while he disagrees with many of the pastor's views, there should be room for "dialogue." At a news conference, Obama characterized himself as a "fierce advocate of equality for gay and lesbian Americans" and said it's important "to be able to create an atmosphere … where we can disagree without being disagreeable." Many gay rights supporters and liberals in general are furious about the selection of Warren, a supporter of Proposition 8, the measure that outlawed same-sex marriages in California. As was the case yesterday, too, the papers characterize the opposition to Warren as if it were merely an issue about a policy difference on marriage, but it's hardly that simple.

Warren has gone as far as to compare "same-sex marriage to incest, pedophilia and polygamy," writes Joe Solmonese, the president of the Human Rights Campaign, in the WP. "He may cloak himself in media-friendly happy talk that plays well on television, but he stands steadfastly against any measure of equality for LGBT Americans." Picking Warren "sends a chilling message" and makes gay rights supporters "question the promises that Barack Obama made in his historic quest to be president," writes Solmonese. "We pray we weren't misled."

Daniel Politi has been contributing to Slate since 2004 and wrote the Today’s Papers column from 2006 to 2009. Follow him on Twitter.