Archive for June 17th, 2009

NEW YORK: A largely unknown car company is planning to open its first factory in what used be a headlight plant in a small town in northern Louisiana, state officials announced on Wednesday.Louisiana economic development officials are enthusiastic about the endeavor which they say will create thousands of jobs. But for now, executives with California-based V-Vehicles, which has backing from activist billionaire T. Boone Pickens, are not saying exactly what type of vehicle the company plans to build.Pickens has been active in promoting natural gas for use in automobiles, but it isn’t clear what form of energy will fuel these cars.Based in San Diego, V-Vehicles is backed by billionaire T. Boone Pickens and the venture capital firm Kleiner Perkins Caufield & Byers. 0:00
/4:36T.Boone Pickens: 300 oilAn auto industry startup. The company was founded in 2006 by former Oracle executive Frank Varasano who has spent 26 years working for the consulting firm Booz Allen Hamilton where he led the firm’s engineering and manufacturing practice, according to the Louisiana economic development council’s Website.”He watched, we all watched, as the auto industry stumbled,” said V-Vehicles spokesman Joe Fisher of V-Vehicles founder Verasano. “He thought he could do something to fix it.”Fisher said Varasano came up with a plan to build a profitable auto company and presented his plan to executives at Kleiner Perkins.Fisher declined to say what was unique about V-Vehicles’ business model, citing the competitive nature of the businesses. Fisher also declined to provide details about the vehicle the company intends to produce at the site. A Website about the venture hosted by the Louisiana Economic Development council showed only a round headlight in one photo and, in other, one corner of a clay mock-up of a car.Design of the cars is being led by former Mazda designer Tom Motano, who is credited with designing the Mazda MX-5 and RX-7 sports cars.Big jobs boost for Louisiana. The plans were revealed in Louisiana, by the state’s economic development council on Wednesday.”Today, we are here to announce that through quick, aggressive action to pursue a transformative opportunity, we have a chance here in Louisiana to reenergize the entire U.S. auto industry,” Louisiana governor Bobby Jindal said in a prepared statement.V-Vehicles plans to retool the former Guide Corp. headlamp factory in Monroe, La., according to the announcement. The plant will employ approximately 1,400 people and will create another 1,800 jobs outside the factory, according to the state. The project involves a capital investment of at least 248 million, according to the announcementFull production of the vehicles is scheduled to begin in early 2011, Fisher said.

Source:CNN

NEW YORK (Fortune) — No one said selling a regulatory reform package would be easy. As a case in point, consider the Office of Thrift Supervision. The OTS, a branch of the Treasury that was established 20 years ago to supervise savings-and-loans, would be eliminated in the oversight overhaul the Obama administration outlined Wednesday.The Obama plan would streamline regulation by merging the OTS with another banking regulator, the Office of the Comptroller of the Currency, which supervises national banks. The administration would also do away with the federal thrift charter that the OTS enforces. This is being done to reduce so-called regulatory arbitrage — in which banks shop for the most lenient overseer.”The fragility of thrifts has become readily apparent during the financial crisis,” the government said in one of the five fact sheets it issued Wednesday to explain its approach. “Eliminating the thrift charter is one of the most important steps towards a more prudent, efficient financial regulatory system.” Given OTS’s poor reputation, you wouldn’t think the proposal would stir much interest, let alone opposition. Many outsiders say the OTS typifies the shortcomings of the current setup, in which regulators are “captured” by their subjects.OTS was the regulator for many of the high-profile financial casualties of the past year — including IndyMac, Countrywide, Washington Mutual and even AIG (AIG, Fortune 500). Its acting director was put on leave in March as Treasury reviewed the agency’s actions in an accounting scandal at IndyMac just two months before it failed. 0:00
/2:04Obama’s new financial rulesYet while the banking industry took pains Wednesday to support the broad outlines of the Obama plan, it became clear it has concerns about numerous details — such as doing away with the OTS. “If the OTS and the OCC merge, at a minimum, the federal thrift charter should still survive and be subject to supervision and regulation by a separate division within the OCC,” the Independent Community Bankers Association said in a statement. The bankers say eliminating OTS would wipe out a culture that understands the needs of small thrifts, which are obliged to channel most of their lending to housing-related activities. “The vast majority of OTS-regulated thrifts have done a great job supporting housing,” said Chris Cole, senior regulatory counsel at the ICBA. “We think the merger could have some impact on housing lending.” Needless to say, anything that helps to make more money available for mortgages at a time when home prices in many markets are in free fall is likely to have some appeal in Congress. Bankers have taken note.”If we want to make housing a national priority, we need to keep issues like this in mind,” said American Bankers Association spokesman Wayne Abernathy.There are also questions about whether the OCC is the right agency to take over supervising small thrifts, given its current brief of overseeing larger national banks. “Losing the OTS would be a mistake,” said Jim Wheeler, a financial institutions partner at law firm Bryan Cave in Atlanta. “What Bank of America has in common with the S&L on the corner is nothing. They don’t even speak the same language.” Others go even further, noting that the OCC can match the OTS bank for bank when it comes to problems. The OCC was the regulator for Wachovia and National City, which were sold in distress to Wells Fargo (WFC, Fortune 500) and PNC (PNC, Fortune 500), as well as for Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500), which soldier on thanks to hundreds of billions of dollars in taxpayer subsidy. And of course, no banking overseer looks particularly good after the collapse of the biggest housing bubble in history — which bankers say underscores the need to move carefully on regulatory reform. “There’s a need to make changes, but there’s also a need to take the time to get it right,” Abernathy said. “This crisis shows us the danger of making bad mistakes.”

Source:CNN

NEW YORK: Chrysler announced plans to reopen 7 of its 11 assembly lines later this month for the first time since the day after the company filed for bankruptcy in April.The company said two plants in Michigan, one in St. Louis and one in Toledo will reopen during the week of June 29. Two factories in Ontario, Canada will also reopen as well as one in Mexico.The seven plants make a variety of Chrysler vehicles, including the Dodge Grand Caravan, Jeep Wrangler and the Chrysler Town & Country. In addition, the company is reopening several factories that make powertrains, axles and other components used by the assembly plants. Chrysler’s parts distribution centers, which supply parts to both plants and dealerships, will also reopen.Three assembly lines — one in Illinois, one in Detroit and another in Mexico — will remain shut for the time being. Those plants employ about 5,000 workers between them.0:00
/1:07GM sells SaabAll told, Chrysler currently has about 38,000 production workers in the U.S., both hourly and salaried, and employs another 9,000 in Canada and 5,000 in Mexico. So most of Chrysler’s workforce will be returning to their jobs later this month. But virtually all of Chrysler’s plants are due to shutdown again for normal summer retooling, which will take place during the weeks of July 13 and 20. And four of the company’s 30 plants are slated to close permanently by next year as Chrysler makes permanent reductions in its capacity. Chrysler has said one of those plants scheduled to close, the one in St. Louis, could be shut down as soon as this September.Chrysler filed for bankruptcy on April 30 and halted most operations a day later as it sought to reorganize its operations, complete a combination with Italian automaker Fiat, and work through an excess inventory of vehicles. The bankruptcy court approved its deal with Fiat last week.So far, the only assembly line that has been restarted was the Conner Avenue Assembly Plant in Detroit, where 115 people make the Dodge Viper niche muscle car. Chrysler is looking to sell that facility.

Source:CNN

NEW YORK (Fortune) — For the first time, Brazil, Russia, India, and China — dubbed the BRIC nations — held a summit this week to discuss the global economy and their role in it. But the gathering in Russia might never have happened if Jim O’Neill, Goldman Sachs chief economist, hadn’t created the acronym in a 2001 paper exploring the countries’ impact as emerging economic powerhouses. Fortune talked with O’Neill about the idea’s evolution, its ever-increasing relevancy, and what it’s like to be Mr. BRIC. Following are excerpts of the conversation.How did BRIC come about?I’d been co-head of economic research at Goldman Sachs (GS, Fortune 500), but after 2001, my fellow co-head left to become chairman of the BBC, so I had to run the department on my own. Goldman Sachs quite rightly puts an enormous amount of importance on this job. I thought, “Oh, my God — I’ve got to put my own imprint on this department for the future.”I was searching for a theme and a new idea. So the specific thing that really led to [BRIC] was 9/11. Around the horror of that event, the underlying message was that globalization was going to continue and thrive. It was going to have to be on a more complex basis, and it wouldn’t effectively be about the Americanization of the world — because that was how it seemed to be in the eyes of many. Even though 9/11 wasn’t a direct sign of this, it crystallized the thought in my head. In November of that year, I wrote a paper called “Building Better Global Economic BRICs.” It showed you couldn’t run the world properly without having these guys more involved.Did you think it would have this impact?Not this impact. It’s transformed my own life. The impact really started to grow two years later, when we did our first piece looking at what the world could look like by 2050, which picked up on the theme of my earlier paper. We showed that some time between then and 2050, specifically 2037, the combined GDP of those four countries could become bigger than the G7. After that, interest from the international corporate community absolutely exploded, and it’s been crazy ever since.When did it break out of the corporate world into the mainstream lexicon?It started post-2003. It’s just grown and grown. These days, obviously on a day like this, I’m sort of proud in a strange way that these guys are meeting together. People think that my job now is being Mr. BRIC. I must get invited to go and speak at things around the world anywhere from one to eight times a day.0:00
/1:04Asian economies bounce back?Why did you group these countries together?The common thing is that all four have a lot of people, with Russia being the smallest at 140 million. Because of globalization, my basic tenet was that if these countries embrace productivity changes that go with global trade and globalization, given that they have such a large number of people, they’re likely to become big. That was the simple premise.Are there any countries that you think should be added?We’ve studied that in some detail a number of times. I created a phrase after it called the Next Eleven. It’s a phrase to describe the 11 developing countries with the largest populations after the four BRICs. We did it purely to see what their BRIC potential was. Mexico and Indonesia could possibly get close to the size of Russia in the future, but nobody else could get close to it and probably not those two either.Should any be dropped?It’s very popular these days for people to say we should drop the “R.” But Russia, over the seven and half years since we’ve had the phrase, has actually grown more than we assumed. The only one that hasn’t is Brazil. The idea that we should forget Russia because it had a crisis in the last year, that’s like saying the United States should be dropped from the G7 because it had a crisis. It’s kind of crazy.Do you think BRIC is more or less relevant today when we talk about these countries?[More so,] witnessed by the fact that they’ve chosen to actually get together. Collectively, they’re 15% of global GDP, and China’s about to overtake Japan. Brazil and Russia have overtaken Canada, and India’s soon going to do so. You can’t think about the world without thinking about all its bricks, and these four are part of it. We radically need overhaul of the IMF, the G7, the G8, to give these guys a much bigger say in the running of the world. If they don’t get it, this meeting will be the beginning of many.Did the BRICs resist being grouped?They’ve all been in their own way extremely flattered. I’ve met many senior people in all these countries as a result of it, and they’re all delighted that we chose to put them on the global map in this way.Do you think the terminology is the impetus behind the meeting?Bizarrely as it sounds, I’ve not really thought about it, but I guess it must be. Without it, why would these guys have gotten together? It sounds slightly scary in saying it to you, but I guess it must be, really.Did you play around with it a little? We could have had CRIB.[Goldman chairman and CEO] Lloyd Blankfein occasionally jokes to me that I should have called it CRIB. I said I never thought of that, but even in hindsight I don’t think I should have given it any consideration because it would have implied that they were just babies.

Source:CNN

NEW YORK: Eddie Bauer Holdings Inc. filed for Chapter 11 bankruptcy protection Wednesday, citing an inability to pay back debt.Eddie Bauer (EBHI) emerged from Chapter 11 bankruptcy in 2005 after being spun off from former owner Spiegel Catalog, which itself sought bankruptcy protection in 2003. Costs from the 2005 reorganization, combined with pressure from the current recession, left the company “with no choice but to use this process to reduce the debt load,” said chief executive Neil Fiske in a prepared statement.”Eddie Bauer is a good company with a great brand and a bad balance sheet,” he added.The outdoor clothing retailer plans to sell most of its assets to private-equity firm CCMP Capital Advisors for 202 million. It expects the sale will be complete in 60 days or less.CCMP has agreed to keep most of the stores and employees, though the sale is open to other bidders per bankruptcy law. Eddie Bauer has 371 stores nationwide, with almost 1,100 employees.Eddie Bauer said it secured financing from Bank of America (BAC, Fortune 500) and CIT Group/Business Credit (CIT, Fortune 500) for a total 100 million based on final court order.In April the company negotiated with lenders for short-term relief on its debts before “explor[ing] various paths for restructuring its balance sheet,” the release said, but it was ultimately unable to do so.

Source:CNN

NEW YORK: For much of the last year, Ford Motor has been the strongest U.S.-based automaker. But with Chrysler already out of bankruptcy and General Motors possibly six weeks away from its own exit from bankruptcy, Ford could soon find itself in the weakest position of the traditional Big Three.The problem for Ford is that its strength was only relative to the greater problems at GM and Chrysler. Ford built its cash reserves not through profits, but by mortgaging most of the company’s assets before the credit crisis of 2008 cut off funding for the other automakers.That pile of cash gave Ford (F, Fortune 500) the ability to ride out the sharp plunge in auto sales without turning to the government for help — at least so far. But it also left Ford with about 32 billion in debt on its books at the end of the first quarter. With GM (GMGMQ) and Chrysler using the bankruptcy process to shed much of their own debt cheaply and quickly, Ford has gone from the automaker with the most cash on hand to the one with the most debt on its books. 0:00
/3:35The man who would save FordGM will have only about 17 billion in debt if it can follow its planned emergence from bankruptcy. Chrysler left bankruptcy with about 11 billion in debt, and a new partner, Italian automaker Fiat, it did not have previously have.Ford also hasn’t been able to cut its manufacturing capacity or its bloated dealership network as Chrysler and GM through bankruptcy reorganization.Ford officials insist the company remains in a strong competitive position against its Big Three rivals — despite all the help they got from the government and the bankruptcy courts.”We don’t know what the implications are going to be, but one thing’s for sure: I like our position,” said Ford Chairman Bill Ford at a conference in Detroit Monday.But others worry that Ford’s debt level could soon become the same kind of burden that plagued GM and Chrysler before their bankruptcy filings.”It’s a huge issue,” said David Cole, chairman of the Center for Automotive Research, a Michigan think tank. “GM and Chrysler are showing how you can do things in bankruptcy you can’t get close to outside of bankruptcy.”Other auto industry experts say that even if Ford can manage its debt level, it will soon find itself in need of a bailout or possibly bankruptcy if auto sales don’t start to rebound in the next year.”Leverage is a concern, but it’s not the primary concern. The greater concerns are low sales and underused capacity,” said Gregg Lemos-Stein, credit analyst with ratings agency Standard & Poor’s, which rates Ford’s corporate credit as CCC+, deep into so-called “junk bond” status. Lemos-Stein said while the company still has a better cash position than its rivals, “they don’t have an indefinite supply of cash, especially since we expect the outflows of cash to continue.” Still, some experts believe Ford’s future looks brighter than its rivals because it has a better lineup of vehicles in the showroom and its pipeline. While GM is busy shedding weaker brands and Chrysler is shifting away from trucks towards smaller cars, Ford has already adapted to changing demands from customers. “They’ve managed their product portfolio pretty well. That’s very important,” said Tom Libby, president of the Society of Automotive Analysts.Libby said that product development at GM and Chrysler took a hit as the companies rushed to slash costs in recent months. That could leave Ford with newer, more attractive products for at least a few years.”They are not being forced to make changes at gunpoint,” added Subroto Banerjee, a partner at business research firm Frost & Sullivan. “They’ve done it very smartly, without all the problems and distractions of the process at GM and Chrysler.”Libby conceded that some of the market share gains Ford has achieved in recent months came because buyers were worried about the future prospects at GM and Chrysler. If those concerns are now put to bed by those companies’ quick trips through bankruptcy, Ford will lose a marketing advantage it once had.And all three Detroit rivals face the problems that brought the U.S. industry to its current crisis — a weak economy, an historic plunge in auto sales and a decades-long trend of losing market share to importers like Toyota Motor (TM) and Honda (HMC). So even if Ford is still stronger than GM or Chrysler, it may not be strong enough to buck those three powerful headwinds.

Source:CNN

NEW YORK: Gas prices have risen for 50 days in a row and the pain at the pump is taking a toll on household budgets across the nation. Nationwide, gas prices now average 2.679, motorist group AAA said Wednesday. Prices have risen every day since April 29, when the national average stood at 2.05 a gallon. Drivers in every U.S. state, with the exception of South Carolina, now pay an average of at least 2.50 a gallon. In the Palmetto State, gas averages 2.49 a gallon. The runup in gas prices comes at a time when drivers are already struggling with record high unemployment and an abysmal housing market. “The rise is gas prices is putting a large dent into our household budget at a time when we are already feeling some pain,” said Michael Clark, a technologies business analyst in Phoenix. Clark, who said prices at his local station have gone up more than 90 cents since May, was recently asked by his employer to accept a 15% pay cut. “I do not understand how the stock market can be up and the price of oil rising when everybody I know is hurting so badly,” he said. Many economists worry that consumers like Clark will be forced to cut back on spending on other items to make up for higher pump prices. That could pose a serious threat to the already battered economy, since consumer spending makes up the bulk of U.S. economic activity. The spike in gas prices comes on the back of a surge in the price of crude oil, which is the main ingredient in retail gasoline.The price of oil has more than doubled since late December, climbing from a low of 33.87 a barrel to more than 70 recently. Meanwhile, gas prices have followed a similar trajectory, jumping more than 1 a gallon over the same time period. Oil prices have been driven higher as investors bet the world’s once-robust demand for energy is poised for a rebound. However, many analysts say the recent runup is overdone, and that oil prices at current levels are not justified based on sound economic fundamentals. Has the rebound in gas prices caused you financial hardship? Are you spending less on other items to help with the cost of driving? Have you postponed summer driving plans? We want to hear your experiences. E-mail your story to realstories@cnnmoney.com and you could be part of an upcoming article. For the CNNMoney.com Comment Policy, click here.

NEW YORK (Reuters) — Four of the largest U.S. banks, including JPMorgan Chase & Co., Morgan Stanley, repaid billions of dollars in taxpayer bailout funds on Wednesday, getting out from under the government’s thumb.Banks have been anxious to return the funds, taken under the 700 billion Troubled Asset Relief Program, to escape the strings attached, including restrictions on executive compensation.JPMorgan (JPM, Fortune 500) repaid 25 billion, Morgan Stanley (MS, Fortune 500) 10 billion, U.S. Bancorp (USB, Fortune 500) 6.6 billion, and BB&T Corp. (BBT, Fortune 500) 3.1 billion.JPMorgan, U.S. Bancorp and BB&T also said they intend to buy back warrants for their common stock from the U.S. Treasury.0:00
/5:17Risks of TARP paybacksThe Treasury said last week that banks repaying bailout funds could also buy back the warrants, issued by the banks as part of the rescue. The warrants give the Treasury the right for up to 10 years to buy common stock in the banks at a set price.The banks can buy back the warrants at “fair market value,” the Treasury said. BB&T is in the process of negotiating the buyback, a spokesman said. A spokesman for JPMorgan declined to comment beyond noting the bank intends to repurchase the warrant. U.S. Bancorp did not explain how, when or at what price it would repurchase its warrant.A spokeswoman for Morgan Stanley declined to comment on its plan to repurchase the warrant.Banks line upOther big banks are also lining up to return bailout funds. Goldman Sachs Group (GS, Fortune 500), which received 10 billion, previously said it would repay the money on Wednesday. American Express Co. (AXP, Fortune 500), which took 3.4 billion, was expected to follow suit.Other big banks that won permission from the government to repay TARP funds are Bank of New York Mellon Corp, Capital One Financial Corp. (COF, Fortune 500), Northern Trust Corp. (NTRS, Fortune 500) and State Street Corp. (STT, Fortune 500)As a condition of being allowed to repay, banks had to show they could raise money from the private sector, both by selling stock and issuing debt without the help of government guarantees. The Federal Reserve also had to agree that their capital levels were adequate to allow them to continue lending.At least 22 smaller banks have been allowed to repay some or all of their taxpayer money, although most must still negotiate terms to buy back or extinguish the government’s warrants to buy their common stock.Bank shares were mostly lower on Wednesday. The KBW Banks index was down 2.1% in midday trading.

Source:CNN

NEW YORK: A flurry of banks officially escaped the clutches of TARP after cutting checks to the U.S. government Wednesday, marking the first major payback of the billions of dollars in aid invested in banks last fall.Still, hundreds of lenders, including industry leaders Bank of America (BAC, Fortune 500) and Citigroup (C, Fortune 500), remain under the government’s thumb, leaving many banks to cope with life inside the confines of the Treasury Department’s controversial Troubled Asset Relief Program.Banks have been working particularly hard to break free from TARP for several months now, decrying the various restrictions that have come with government aid, including restrictions on compensation for executives and other top earners.But regulators have conceded little, fearing that many banks may be ill-equipped to withstand another bout of economic turmoil in the months ahead. There have also been concerns that banks may scale back on lending after returning TARP funds.Small and mid-sized lenders, many of whom were strongly encouraged by regulators to participate in the program shortly after its launch last fall, have been met with some resistance in the application process, said David Katz, a partner in the financial markets practice at Orrick, Herrington & Sutcliffe. “I think a lot of those institutions are very upset and unhappy,” he said. “They have not been told no, but [regulators] are not moving very quickly.”Before last week’s announcement, only about two dozen banks, mostly community-based lenders, have won approval to redeem preferred shares the government acquired last fall. That represents nearly 1.9 billion in taxpayer money.At the other end of the spectrum, the ten financial firms that were approved to exit TARP last week, including JPMorgan Chase, Goldman Sachs and American Express, are poised to return a combined 68 billion in funds to the Treasury. When will other big banks escape TARP?But some large lenders have opted not to apply to pay back money just yet, including Pittsburgh-based PNC (PNC, Fortune 500) and Wells Fargo (WFC, Fortune 500), two companies that have been widely recognized as two of the nation’s healthiest banks.While the pair have cited acquisitions of rivals made late last year and the tough economic climate for remaining within the program, it is clear that both banks, and others, will have to raise capital in excess of what was required by the government’s stress-test program to win their freedom from TARP.Wells Fargo, which has publicly groused about the program as well as the stress tests, had hoped to rely, in part, on the bank’s revenue power to fix its 13.7 billion capital shortfall, said Raymond James analyst Anthony Polini.But after consistently sparring with regulators over the past 10 months, the San Francisco-based banking giant is quietly acquiescing instead, choosing to earn its way out of TARP in a matter of months. Wells received 25 billion in TARP funds last fall.”I think Wells is just getting a little tired of the process,” said Polini. “The bottom line is it will probably be easier if it can put two solid quarters under their belt.”PNC, having already filled its 600 million capital shortfall, could follow closely behind, although some analysts suspect it may not pay back the 7.6 billion in TARP funds it received until some time in 2010.Experts suggest that other big recipients of government aid, including SunTrust (STI, Fortune 500), Huntington Bancshares (HBAN) or Marshall & Ilsley (MI), are likely candidates to emerge from TARP in the near future. These three regional banks, which took hold of a combined 8 billion in government aid, have successfully managed to raise capital in the last month.Some even think Bank of America (BAC, Fortune 500), which was required to raise nearly 34 billion, by far the most strained of the 19 big banks tested, is poised to earn its freedom from the program. BofA chief Ken Lewis has said publicly in recent months that he is anxious to return money to U.S. taxpayers.0:00
/5:17Risks of TARP paybacksThe bank has already raised nearly all of the capital mandated by regulators. And if its controversial purchases of Merrill Lynch and Countrywide continue to bolster the company’s bottom line, much as they did in the first quarter, the bank could soon be allowed to pay back the 45 billion in government aid it has taken in since last fall. “Despite all the questions raised about Bank of America, if management makes it a priority, they will find a way,” said Linus Wilson, an assistant finance professor at the University of Louisiana at Lafayette.The timetable for rival Citigroup to exit TARP however, remains a bit more cloudy. Speaking at a forum Monday hosted by CNNMoney.com parent Time Warner, Citi chairman Richard Parsons said that the embattled bank planned to pay back the roughly 50 billion in government assistance it has received. But he was unable to provide a timetable for doing so. As part of the repayment process, banks have to prove to both the Treasury Department and their respective regulator that they will remain well capitalized and will continue to lend after returning TARP funds. One additional stipulation is that banks must be able to issue debt without government assistance.Most experts doubt, however, that regulators will impose stricter standards on banks that want to exit TARP in the future — assuming, of course, that banks do not hit another rough patch.”It might actually be easier,” said Raymond James’ Polini. “But it depends on the economy.”

WASHINGTON (CNN) — House Republicans on Wednesday presented what they called a “sorely needed” alternative to Democrats’ proposals to overhaul health care.Republicans want to make sure all Americans have access to affordable coverage, Rep. Eric Cantor, the House minority whip, said Wednesday.”We do so by making sure we keep down costs and incorporate the ability for folks to pool together to access lower costs, to bring private sector into the game and keep government out,” Cantor said.Neither Democrats nor Republicans have detailed how they would pay for their proposals. Rep. Roy Blunt, R-Miss., said his party’s plan will cost “far less” than that of the Democrats and “provide better results for the American people.”0:00
/4:22Geithner: Health care’s criticalRep. Dave Camp, R-Mich., who co-authored the GOP plan, said it’s important to make sure the bill is one with a “common-sense approach.”"We are not going to have a bill that is larger than the GDP [gross domestic product] of most countries, which is what we are beginning to see roll out,” said Camp, the ranking Republican on the House Ways and Means Committee.”Clearly, if we move forward and this bill is on the floor, we are going to have to have a bill that is paid for and that’s going to depend on what the scores come back.”A score is a preliminary estimate of the cost of proposed legislation. A preliminary review by the Congressional Budget Office of a plan being drawn up in the Senate found it would cost about 1 trillion over 10 years to extend health insurance to 16 million people who otherwise would not be covered, about a third of the roughly 45 million now uninsured.Camp said that the House Republican proposal calls for refundable tax credits for lower-income Americans.0:00
/4:21Curing public health careBut Camp and Republicans have not determined key details for their proposal, including the amount of those tax credits or who precisely could be eligible.House Republicans on Wednesday planned to release a two-page summary of Camp’s proposal, which CNN Radio obtained.Some highlights include:~”Pools” of insurance. It would let states, small businesses and others group together to offer lower-cost, health care plans. Such pools would have to offer, at a minimum, any coverage that is provided in a majority of states.~Medicaid transfer. It would allow Medicaid users to take the value of their Medicaid benefits and transfer/apply those to a private health care plan instead.~Boosting of health care savings accounts. It would increase incentives for people, especially those in lower income brackets or over 55, to build up HSAs.~Automatic insurance. It would encourage employers to sign up their workers for health insurance automatically, so that employees would have to “opt out” of coverage if they didn’t want it.This Republican alternative bill also contains several ideas that are increasingly championed by both parties.~Longer coverage for youths. It would allow dependent children to stay on their parents’ policies until they are 25.~Promotion of wellness at the workplace. It would encourage employers to reward employees for improved health.~Expansion of community health centers.~Mobile health care. It would allow Americans to maintain their specific health insurance policies when they lose or leave jobs.~In-home care. It would provide financial help and encourage more in-home care over institutions.~Limitations on malpractice lawsuits. There is general agreement over limiting such lawsuits, but a deep divide exists over exactly how much.This House Republican plan comes a day after fellow Republican Rep. Mark Kirk of Illinois and other moderates in the so-called Tuesday Group released their proposal, which spelled out many of the same ideas as the Camp bill.Kirk contends his plan is less partisan but said he supports Camp’s effort. — CNN’s Lisa Desjardins contributed to this report.

Source:CNN