Capitol Hill
05 December 2008
U.S. auto company executives returned to Capitol Hill Friday to renew appeals for billions of dollars in emergency loans. They faced skeptical questions from members of the House Financial Services Committee dissatisfied with the automaker's restructuring proposals.
The uncomfortable ride for auto executives continued, as lawmakers considered whether to hand over $34 billion in loans to help companies avert financial collapse.
Heads of Ford, Chrysler and General Motors repeated statements made to a Senate committee on Thursday, outlining plans for restructuring and efforts to achieve more efficiency and profitability.
Ford's Chief Executive Officer Alan Mulally said, "You were clear that our business model needs to change. I absolutely agree,"
Pointing to huge revenue losses, Robert Nardelli of Chrysler said the costs for the U.S. economy of saving that company would be far less than the ripple effects of allowing it to fail.
"I recognize that this is a significant amount of public money, however we believe this is the least costly alternative considering the depth of economic crisis and options we face," he said.
Richard Wagoner of General Motors said his company has learned from mistakes.
"We are here today because we have made mistakes that we have learned from, because forces beyond our control in the credit markets have pushed us to the brink, and most importantly because saving General Motors and all [that] the company represents is a job worth doing," said Wagoner.
United Auto Workers Union [UAW] President Ron Gettelfinger said any form of bankruptcy for the auto companies would be unacceptable.
"In the present environment a so-called pre-packaged Chapter 11 bankruptcy is simply not a viable option for restructuring the Detroit-based auto companies," he said.
Financial services panel chairman [Democrat] Barney Frank warned of what he called disastrous consequences of letting the companies fail.
"A permission to these three large entities to stop paying their debts, that is called bankruptcy, would greatly exacerbate the credit crisis," he said.
Democrat Brad Sherman was among those questioning companies commitment to transforming their operations:
"A careful reading of the written pronouncements of the automobile companies indicates that they themselves are not going to adhere to the kind of tough conditions that the American people expect and that the auto industry needs," Sherman said.
Republican Spencer Bachus suggested that automakers have little choice but to undergo reorganization under some bankruptcy arrangement:
"Short of a protective restructuring of General Motors or Chrysler, the domestic automobile industry will not be successfully re-made and there will be no lasting solution to the considerable challenges that it faces," he said.
President Bush on Friday said companies must make tough choices and demonstrate a plan for viability, adding that the government must be able to recover money it gives them.
In a statement on new figures showing the highest monthly job loss figures in 34 years, the president urged Congress to act next week on an automaker rescue plan:
"It is important that Congress act next week on this plan, and it is important to make sure that taxpayer's money be paid back if any is given to the companies," he said.
If lawmakers can reach agreement in coming days, and obtain support from the White House, Congress could come back into session to consider legislation next week.
However, differences remain on where the money should come from. House and Senate Democrats want to use funds from the $700 billion Troubled Assets Rescue Plan Congress approved in October for the financial industry.
President Bush on Friday repeated his insistence that any new money come from funds Congress has already appropriated for automakers to help them improve fuel efficiency.