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Buffett's Suggestion for Auto Bailout Save Email Print
Posted: 11:24 AM Nov 21, 2008
 Last Updated: 11:24 AM Nov 21, 2008
 Reporter: Associated Press
44 comments
A | A | A

Billionaire Warren Buffett has an idea for U.S. automakers asking Congress for a bailout; invest in their own companies.

Buffett says any bailout package needs to include a business solution and it should be negotiated by the president, not Congress. He says the government should insist the top executives at Ford, General Motors, and Chrysler invest a significant percentage of their own net worths in their companies. That way the executives and taxpayers would both share in any profits or losses.

The Oracle of Omaha made the comments during a Fox Business News interview that is set to air Friday afternoon. He also said he would never serve as U.S. Treasury secretary.
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Posted by: FORD TRUE BLUE on Nov 24, 2008 at 09:56 AM
Toni, obviously you dont research well enough ummm Your precious TOYOTA was bailed out by there government I believe to the tune of 51 billion. Really if you all think that foriegn company wont falter if the "big 3 falter" you are badly mistaken!!! The ripple effect wil be terrible if we lose these companies. They are not looking for a bailout but a bridgeloan to get to 2010 when UAW wont be a problem any longer and also to all you people who buy foriegn...look at the new FORD FUSION....it puts a smack down on your precious Camrys and Accords of the world and All Ford producs either are now equal to or ahead of those companys cars in quality and mpg!!! Ahhh....too blind to see the truth America if the 3 fall you all will fall with!!! it!!!
Posted by: AB on Nov 24, 2008 at 01:30 AM
I own a year 99 Chevy Cavalier and after 125,000 miles I still have yet to have any problems that would demand the car sit in an auto shop for work to be done. We had the battery die on us last year, oh and the brakes needed changed. For a 99, that's been driven into the dirt mileage wise, I'd say she is a fair investment. Now this sounds like a sound solution for the problem, sad though that nobody will take anything with a grain of salt.
Posted by: lauren on Nov 23, 2008 at 08:31 PM
I used to sell Hondas and frankly, while they make a good product, the annual upkeep is far more. American made cars don't have timing BELTS that need to be replaced at 60K (or can blow as low as 40K). My husband bought an '07 Chevy Silverado and actually the powertrain warranty is as good as any Japanese car. Yes, Toyota and Honda make cars here in the US, but where do the profits go? I don't understand the bailout request. This is AMERICA, land of free enterprise, why can't GM, Ford and Chrysler file for reorganization bankruptcy and rebuild their businesses? I don't want to buy an American car that the US government owns a stake in...just like I don't want to bank at a US government-owned BANK! The government owning private enterprise and the banks, that's just communism...oh but that's right, that's where we're headed. And we were headed there under CLINTON so the Obama thing is just an add-on....
Posted by: Horray on Nov 23, 2008 at 08:11 PM
Finally, someone is making sense leave it to Warren. American cars are ripe to break down and get terrible resale value. When we look at new cars I am sad to say we don't even contemplate American. And to you who says the used foreign cars are expensive that is the point they are more reliable therefore hold their value.
Posted by: John on Nov 23, 2008 at 09:57 AM
To Anonymous (6:16pm) You're right about how little it would be if everyone received a "rebate" from the goverment if they bought a car, but how many 4 year olds go out and buy a car or a family of 4 buys 4 cars? My idea is that you have to buy a car from one of the big 3 to receive a rebate check, then let the car makers still pay back the 25B used to get their cars in inventory sold.
Posted by: Mattias on Nov 23, 2008 at 09:48 AM
The problem with American made cars are they are poor quality and no where near as long lasting as the Toyotas and VWs of the world. Why should the "Big 3" be bailed out when it's their fault they haven't kept up? Why did it take an economic crisis and souring gas prices for them to start "updating" their cars? Instead they fought it out over who can make a bigger SUV (Ford and Chevy duking it out with the Suburban and Excursion). Warren's idea is great! Lets see how much these executives care if it's coming out of their deep pockets. Bet most resign and take their money running.
Posted by: Anonymous on Nov 23, 2008 at 09:18 AM
Dan, I buy used American cars. The used foreign cars are way too expensive.
Posted by: karen on Nov 22, 2008 at 09:21 PM
To Anonymous..Nov 21.....get a clue. Obama is gong to be your new president. That's not up for discussion anymore. It's a done deal...get over it. Further more, why shouldn't the execs have to put their money into the pot.....They are going to work alot harder to make this a successful venture if it's their money they have to worry about... That's how one learns to respect the things they work for in life....if it's handed to you on a silver plater (bailout), no need to work as hard. There's gonna be more where that came from, however, put your own money in to finance it. WHole different story....I love Warren!
Posted by: Jennifer on Nov 22, 2008 at 02:51 AM
I think that congress and everyone who has more money than us is getting a little too carried away with all this bailout crap. Those who have money have it made and the low income or poor people have pay check to pay check. Yes gas is going down and some food is going down, but lay-offs are on the rise. It is really scarry out there and it is getting to where my family is preparing for the worst and praying for the best. For a family of six, we are fixing meals that can go for a few days and even freezing some. Pinching pennies and stretching food stamps as far as possible. Getting only what we need and making sure that we have a roof, food, water, electricity, transportation, and medical and clothes. I and my husband do without to make sure our kids have everything they need. I will sacrifice eveything for my children. My parents even help with things once in a while. Thank God for family.
Posted by: Mary O. on Nov 21, 2008 at 07:52 PM
That's good for a start. I say they all stop their sniveling and fix the mess they made by themselves. That's what this country was founded on... hard work and responsibility!
Posted by: Anonymous on Nov 21, 2008 at 06:26 PM
Dear Mr. Buffett, don't you realize it's a lot easier to fly to D.C. on your corporate jet (at no personal cost) and ask for free money than to actually think and invest your own money in a company you have no faith in? You act as if thinking and investing your own money are good things.
Posted by: Anonymous on Nov 21, 2008 at 06:16 PM
Giving the public $25B may sound like a good idea, but it's not much. If we split that among the 200M people over 18, that would be about $125 each. I'm not saying I wouldn't like $125, but it's not enough to solve any problems.
Posted by: Fred on Nov 21, 2008 at 03:36 PM
Maybe the auto makers should have cut back on production long... before this, you can't tell me they didn't see it coming. Now we the people should bail them out? Hard to swallow. They need to restructure their executive positions so they don't get into this position again. So sad for their workers.
Posted by: Dan on Nov 21, 2008 at 03:33 PM
How about American auto companies make quality automobiles that get better mpg and last longer without the transmission going out after 20,000 miles (Ford Tauras) I buy foreign and I like my mpg
Posted by: TONI on Nov 21, 2008 at 03:22 PM
HOW COME TOYOTA/HONDA/VOLKSWAGON COMPANIES AREN'T NEEDING BAIL OUT MONEY ? NO ONE BAILS ME OUT FOR MAKING STUPID FINANCIAL MISTAKES. I GUESS WHAT I AM TIRED OF IS ME SPENDING MY HARD EARN MONEY ON PEOPLE WHO CAN'T MANAGE THEIRS.
Posted by: Random Thoughts on Nov 21, 2008 at 03:13 PM
GM and Ford burned through $14 BILLION in cash in the 3rd quarter, and I am sure it will be the same or worse in the 4th quarter. Chrysler does not have to file public reports, but let's say their cash burn rate is $3 billion per quarter. Anyone who thinks that $25 billion is all that the automakers will need as a "bridge loan" is smoking something. This MAY get them through 6 months, at most. This will be worse than the AIG bailout, where they came back for $50 billion more after blowing through the initial $80 billion. On top of that, no one is buying cars right now (US or foreign) so the parts manufacturers and auto dealers will be right behind GM/Ford/Chrysler and asking for billions more in cash. 17 million autos were sold in a year a few years ago - now we are talking about 10-11 million, tops. One or more of the manufacturers has to close, along with a few hundred dealers. Facts is facts.
Posted by: Keith on Nov 21, 2008 at 02:58 PM
Warren proves once again why "he's the man!"
Posted by: J from Bennington on Nov 21, 2008 at 02:47 PM
@Anonymous at 11:44 a.m.: Many "American" cars are built in Canada. Toyota builds their U.S. cars in CA, AL and KY. Most of the American cars are unreliable - just check out Consumer Reports (although Ford is getting better). Most get horrible gas mileage. Most break down under 100,000 miles. Resale is horrible. Goodness knows I tried, but the last GM car that blew an engine at 75K and a Ford Explorer at 83K was the last straw. Too bad the Big Three didn't bother to try. No SUVs in this household, and no American cars. We don't have a private jet to take us places if a GM car breaks down.
Posted by: Anonymous on Nov 21, 2008 at 02:35 PM
Why would the President's of the Companies invest when Obama wants to take their profit and Spread the Wealth. Investing in Stock is now officaly a Bad Idea with the Obama Adminstrations plans to exploit the one's willing to risk Money in the Stock Market in order to give to thise who never risked anything in life.
Posted by: Dick on Nov 21, 2008 at 02:26 PM
That's the best suggestion I have heard of so far.
Posted by: Hey... on Nov 21, 2008 at 02:22 PM
Where's my bailout? I am $3,000 in debt and living paycheck to paycheck... I made stupid financial decisions, so why can't I get a huge unreasonable sum from the government to make up for my lack of good money management and frivolous spending?? Why should I be held accountable if the big wigs aren't?? Oh and by the way, this is sarcasam, for those who are lost on that art....
Posted by: ANON on Nov 21, 2008 at 02:19 PM
Trying to get a piece of the PIE. I'm with you john, I could use a new AMERICAN BUILT car...Mr. Buffett, you're a Genius.
Posted by: bo on Nov 21, 2008 at 02:03 PM
I think they should file for Bankruptcy and sell anything of value they might have. I'm sick of hearing about Congress bailing everyone out, when in trouble what about us???? The real POOR people they are taking everything we got!!! Now they want our pennies too!
Posted by: Yes on Nov 21, 2008 at 01:57 PM
I totally agree with you John, you rock! Give us (the consumer) $25B and let us spend that money. Then we'll see what and who gets "bailed out." Shouldn't it be our choice what gets done with our money?
Posted by: DDB on Nov 21, 2008 at 01:54 PM
ANONYMOUS: Here is a better idea, why can't American car manufacturers show some innovation? I think the car companies put themselves in the position they are in by not building for the future. They also lost their reputation by making substandard cars for years. As with any business, once you lose your reputation for quality it is hard to get those buyers back. "Buy American" sounds good, but in the real world producing the best product and providing the best service is what will win in the market place. The Big Three lost that battle a long time ago and now they have alot of ground to make up.
Posted by: mw on Nov 21, 2008 at 01:51 PM
To sALLY, that doesn't make any sense at all. Do you really think that Buffett needs any other peoples money? If you do, then you don't know who he is. I think that is a smart idea. CM, I agree with you. Have the executives cough up some of their own money and help save the companies and their employees from being unemployed.
Posted by: HD on Nov 21, 2008 at 01:45 PM
Sally, turn off the "caps lock", learn to spell, check your grammer and facts before you go shooting your mouth off. Mr Buffett has put plenty of his money already to help the market. Besides the time to put money in is now when the stocks are cheap not later when they are back up.
Posted by: Anonymous on Nov 21, 2008 at 01:42 PM
Mr. Buffett is an opportunist. I don't fault him for that. However, he is looking after number 1. For if he goes broke, he can't give all of his money to Africa.
Posted by: Biff on Nov 21, 2008 at 01:33 PM
Good idea, Warren. Anonymous - I'll buy American cars when the warranties and quality match those of foreign automakers. Haven't bought American in over 16 years, and I've only had two cars. My last American car was an Oldsmobile. I bought it new, and it was constantly in the shop, with nothing covered under warranty, and it didn't fit the lemon laws. After a cracked cam at 37K, I was done.
Posted by: barney on Nov 21, 2008 at 01:26 PM
keep buying them, warren.
Posted by: sALLY on Nov 21, 2008 at 12:47 PM
wARRENS ONLY PUTTING HIS 2 CETS IN SO uNCLE SAM WILL BAIL THE AUTO IND OUT tHEN HILL PUT HIS MONEY IN . aND THAT WAY HE WILL REAP THE BENIFITS FROM THE TAX PAYERS.
Posted by: jen on Nov 21, 2008 at 12:40 PM
Something needs to be done...its riduculous that these CEOs come beg Congress for money while flying in on luxury private jets and enjoying $26 million salaries/bonuses.
Posted by: Cathy on Nov 21, 2008 at 12:37 PM
This is why the man is worth so much money!
Posted by: dave on Nov 21, 2008 at 12:33 PM
buffet only invest in companys that make money not ones that go farther into debt everyday
Posted by: CM on Nov 21, 2008 at 12:25 PM
Boy, does that make sense! I'm sure I don't understand everything there is to these bailouts but it sure doesn't make any sense to me that the car makers and airlines have to have bailouts at the same time that the senior people are living "high on the hog." I don't have a problem with the big executives getting a big paycheck. But...don't tell me how broke your company is while you are getting on your private jet (ok, owned by the company but only to be used by executives) on your way to Jamaica for a month while your $5M mansion built in 2006 gets a facelift (at the same time your wife does). How arrogant.
Posted by: Mario on Nov 21, 2008 at 12:24 PM
US government should lend the money to the UAW to buy GM Ford and Chrysler
Posted by: m on Nov 21, 2008 at 12:02 PM
WARREN YOU ROCK!!!
Posted by: omaha on Nov 21, 2008 at 11:57 AM
I agree with Buffett's suggestion that the executives use their own net worth to save their companies.
Posted by: John on Nov 21, 2008 at 11:55 AM
If the goverment gives automakers 25 billion, they won't lower the price of their cars and people won't be able to afford the cars. If the goverment gives the taxpayers the 25 billion in incentives to buy cars then the consumer can afford to buy cars and the auto industry still gets the money. Win win for both the consumer and the auto industry.
Posted by: si on Nov 21, 2008 at 11:48 AM
You're the man Warren ... agree totally ... if they are putting up bucks maybe they won't be quite so careless.
Posted by: Anonymous on Nov 21, 2008 at 11:44 AM
OR! How about people buy american cars and keep the money in America. Just an idea.
Posted by: broke on Nov 21, 2008 at 11:40 AM
to bad he didnt want to be treasury secutary he could invest our countrys money make us more . oh i forgot we dont have any money we are $999,999,999,999,999,999,999,999,999,in debt BEFORE all thes bailouts
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