Automakers Request $34 Billion In Loans
RENEE MONTAGNE, host:
This is Morning Edition from NPR News. Good morning, I'm Renee Montagne. Detroit's automakers pleaded for help from Congress yesterday for the second time in less than three weeks. This time, they explained how they planned to save their companies from bankruptcy, and they asked for even more money. But as NPR's Frank Langfitt reports, it's still unclear whether Washington will give them billions in loans.
FRANK LANGFITT: The tone was very different from the one the car executives struck last month. Instead of flying in on private jets, they arrived in fuel-efficient cars. And rather than blame others for their problems, they took some responsibility. General Motors CEO Rick Wagoner kicked off the mea culpas at a hearing before the Senate Banking Committee.
Mr. RICK WAGONER (CEO, GM): We're here today because we made mistakes, which we're learning from.
LANGFITT: Then Ford CEO Alan Mulally took his turn.
Mr. ALAN MULALLY (CEO, Ford): We produced more vehicles than our customers wanted and then slashed prices.
LANGFITT: Together, the companies are asking for up to $34 billion in loans. That's $9 billion more than they said they needed last month. Each executive explained what he would do to make sure his company survived. GM said it would slash up to another 31,000 jobs. Chrysler CEO Robert Nardelli said his company had already reduced models and was developing more sensible ones.
Mr. ROBERT NARDELLI (CEO, Chrysler) : We've identified approximately $4 billion of potential cost savings and improvements. Our plan also includes producing high-quality, fuel-efficient cars and trucks...
LANGFITT: Some senators were pleased to see more specifics from the CEOs and overall, their performance was stronger than a couple of weeks back, when they were widely slammed for being vague and evasive. But other senators remained skeptical - especially Richard Shelby from Alabama, the committee's ranking Republican.
Senator RICHARD C. SHELBY (Republican, Alabama): A lot of people believe sincerely that the restructuring plans that each of your companies has provided us are not a serious set of plans, that they contain few concrete details on how your companies will return to profitability.
LANGFITT: Some critics of the Detroit companies suggest they should head to bankruptcy court. There, they say, a judge could enforce the tough, painful restructuring necessary for the firms' survival. The auto executives insist that's a death sentence. Who, they ask, wants to buy a car from a bankrupt company? At today's hearing, senators searched for a solution that would have some of the power of bankruptcy without the stigma.
Mr. GENE L. DODARO (Acting Comptroller General, U.S. Government Accountability Office): There needs to be a rigorous board put in place to oversee this process.
LANGFITT: That's Gene Dodaro. He's the acting comptroller general of the Government Accountability Office. He was talking about a government board that would force the auto firms to stick to their plans, and force others - the union, lenders, car dealers - to make tough concessions.
Mr. DODARO: One of the tasks of the board is to bring all parties to the table to have a negotiated type of an arrangement...
LANGFITT: Dodaro said the board would act like a bankruptcy court. He likened it to the federal trustee that oversaw the Chrysler bailout nearly 30 years ago. When asked, the auto executives all endorsed the idea, and a number of senators liked it, too. But whether a powerful oversight board would convince opponents to support the giant loans is unclear, and there are fears the companies will need a lot more money than they're now asking for. Mark Zandi is chief economist with Moody's Economy.com. Here's what he told the senators.
Mr. MARK ZANDI (Chief Economist, Founder, Moody's Economy.com): Under the most likely outlook for the economy and auto industry, the $34 billion in loans requested by the Big Three will not be sufficient for them to avoid bankruptcy at some point in the next two years. They would ultimately need, in my view, somewhere between $75 billion and $125 billion to avoid this fate.
LANGFITT: After the hearing, committee chairman Christopher Dodd, the Connecticut Democrat, sounded hopeful, but he has more than just his colleagues to convince. A CNN poll out this week found that 60 percent of respondents opposed loaning money to the companies.
Frank Langfitt, NPR News, Washington.
NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR’s programming is the audio.