Automakers Head To House With Bailout Appeal

The CEOs of the Big Three automakers are back on Capitol Hill, this time facing skeptics on the House Financial Services Committee. Lawmakers are reaching for solutions as they assert they cannot let the car companies fail, while insisting they aren't writing any blank checks.

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MICHELE NORRIS, host:

From NPR News, this is All Things Considered. I'm Michele Norris.

MELISSA BLOCK, host:

And I'm Melissa Block. It's deja vu all over again on Capitol Hill. Auto executives returned for a second day in their efforts to convince a bailout-weary Congress to ante up $34 billion. The CEOs are warning of disaster if the industry can't get financial aid from the government. As NPR's Debbie Elliott reports, there are a lot of ideas in Congress about what to do, but no consensus.

DEBBIE ELLIOTT: Today's sobering unemployment figures provided new context for the debate over whether to extend a lifeline to the domestic auto industry. Democratic Financial Services Committee chairman Barney Frank opened the hearing with a dire warning.

(Soundbite of congressional hearing, December 5, 2008)

Representative BARNEY FRANK (Democrat, Massachusetts; Chairman, House Financial Services Committee): For us to do nothing, to allow bankruptcies and failures in one, two or three of these companies in the midst of the worst credit crisis and the worst unemployment situation that we've had in 70 years would be a disaster.

ELLIOTT: Skeptics fear government loans won't be enough. Others wonder where Congress should draw the bailout line.

Representative JEB HENSARLING (Republican, Texas): Can you name me three industries in this economy that aren't hurting, that couldn't use $34 billion?

ELLIOTT: Texas Republican Jeb Hensarling.

Rep. HENSARLING: So, I wonder what the standard is. Is it simply because you're bigger or perhaps in more pain than other industries in the economy? That troubles me. If we say yes to you, who do we say no to?

ELLIOTT: Chrysler's Robert Nardelli tried to answer.

Mr. ROBERT NARDELLI (Chairman and CEO, Chrysler): In our case, there's about a million people depending on Chrysler's success. And so I'm certainly not justifying because we're bigger; I'm merely presenting the point that we may have a broader impact across the country, sir.

ELLIOTT: Lawmakers on the House panel have different ideas about the path out of the crisis. Illinois Republican Donald Manzullo thinks the solution is to create demand for American-made cars.

Representative DONALD MANZULLO (Republican, Illinois): We need to encourage Americans to start buying cars again and that is not in any of the plans. We should give Americans tax incentives, tax credits, to encourage them to buy cars.

ELLIOTT: Others suggested any emergency loan should require a merger of GM and Chrysler. The panel's ranking Republican, Spencer Bachus of Alabama, favors a bankruptcy reorganization paired with loans from the banks that have benefited from the $700 billion financial bailout.

Representative SPENCER BACHUS (Republican, Alabama): It is a solution not by Congress I'm proposing, but by the industry itself, but with the supporting role by the U.S. government.

ELLIOTT: As the ideas were bandied about, Pennsylvania Democrat Paul Kanjorski warned the Detroit CEOs that there's little time to fashion a congressional remedy.

Representative PAUL KANJORSKI (Democrat, Pennsylvania): This is not a time for us to horse around. What do we have to do? A very complicated agreement, too complicated to put together and get done before the end of this month. So, we're looking at the precipice. You're going to go over if we don't do something.

ELLIOTT: Kanjorski suggested a quick-fix bridge loan, giving GM and Chrysler enough to get them through until the spring, when the new president and Congress could grapple with their problem. After the hearing, Chairman Frank said it was important that Congress pass something that provides enough liquidity to keep the companies going until about March. Democratic leaders have implored the Bush administration to help automakers under the financial bailout. But President Bush today urged Congress to redirect money all ready appropriated for developing fuel-efficient cars. He said he was concerned about the viability of the auto companies.

(Soundbite of press conference, December 5, 2008)

President GEORGE W. BUSH: And likewise, I am concerned about taxpayer money being provided to those companies that may not survive.

ELLIOTT: Congressional leaders say they'll work through the weekend in hopes of having a proposal to consider next week. The Senate is set to return Monday afternoon. Debbie Elliott, NPR News, the Capitol.

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Automakers Seeking Billions Have Bush's Backing

President Bush on Friday said he supports lending billions of dollars to U.S. automakers as the heads of Detroit's Big Three appeared again before Congress to plead for a bailout.

Lawmakers, too, seemed to be moving reluctantly toward a consensus that something needs to be done to keep General Motors Corp., Ford Motor Co. and Chrysler LLC — companies that directly or indirectly account for the employment of hundreds of thousands of workers — from going under.

The sticking point was where the money should come from. The White House insists that the money should come from modifying a $25 billion Energy Department loan program meant to promote fuel-efficient technologies, while congressional Democrats say it should be drawn from the $700 billion financial industry bailout.

"We believe this is the least costly alternative," Chrysler CEO Bob Nardelli told the House Financial Services Committee.

Key lawmakers have also called on the Federal Reserve to give the auto companies the kind of direct low-cost loans the central bank has been awarding to financial firms.

As the CEOs appeared before lawmakers for a second day Friday, Bush said he was concerned about the viability of the automobile companies.

"I am concerned about those who work for the automobile companies and their families," he told reporters at the White House, using the word "recession" for the first time to describe the state of the nation's economy. "Likewise, I am concerned about taxpayer money being provided to these companies that may not survive."

Rep. Barney Frank (D-MA), chairman of the financial services committee, urged action, noting unemployment figures released earlier Friday showing the biggest monthly job loss in 34 years.

"For us to do nothing, to allow bankruptcies and failures in one or three of these companies in the midst of the worst credit crisis and the worst unemployment situation that we've had in 70 years, would be a disaster," he said.

Last month, the auto company executives were sent home empty-handed and told to come back with more detailed plans of how they would spend the money and restructure their companies. From the time the CEOs first appeared two weeks ago, their request increased from $25 billion to $34 billion.

"I don't want to send you home again, because it's going to get more expensive," joked Rep. Gary Ackerman (D-NY).

Several lawmakers pressed automakers to consider a pre-negotiated bankruptcy, which the companies have shunned.

While Bush stuck to his insistence that the fuel-efficiency fund be utilized, President-elect Barack Obama was not stepping forward with an alternative.

Frank complained that Obama is "going to have to be more assertive than he's been."

From wire reports

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