Saving Detroit Three Is in the Country's National Interest, Experts Agree
December 05, 2008
By Michelle Krebs
The most dramatic and convincing moment of five-and-a-half hours of Congressional testimony on Detroit automakers' request for financial help came when Texas Democrat Al Green asked the panel of esteemed financial and industry experts simple, straightforward questions. Requesting them to raise their hands like third-graders if their answer was yes, he asked:
Was bailing out AIG in the national interest?
All six hands went up.
Is it in the national interest to bailout the Detroit automakers?
All hands shot up.
Would it be damaging to the national interest not to take action to help Detroit's automakers?
All hands went up.
"Then we must act. It is in our national interest," Green concluded.
Indeed, at the close of testimony before the House Financial Services Committee, Chairman Barney Frank, D-Mass., agreed that he was more optimistic at the close of the session than at its opening that Congress would come up with a rescue package for Detroit automakers. How it will be accomplished and from what government funds the help will come remains a question -- and a battle.
"If we are lucky we will come out with a bill next week that nobody likes," Frank said at the close of the session. "Any bill that any individual likes couldn't pass, but with the sufficient consensus that we have to do something, I hope we can get something that's acceptable to both houses."
He added that the unemployment report showing another 533,000 jobs in November "has heightened the interest in doing something."
Still, the bridge loans to the automakers are anything but guaranteed with a number of congressmen, more in the Senate than the House and most often Republican and/or from the Southeast, continue to oppose the loans. Many still insist the Detroit Three should file Chapter 11 or undergo some kind of prepackaged restructuring.
The House committee took its second turn at it after six hours of testimony in the Senate on Thursday. On Friday morning, the usual suspects -- UAW President Ron Gettelfinger, General Motors CEO Rick Wagoner, Ford CEO Alan Mulally and Chrysler CEO Robert Nardelli appeared before the House Financial Services Committee as they had a couple weeks ago.
They reiterate the same statements they made at Thursday's Senate hearing. And generally they were grilled on the same topics: Why not file Chapter 11? how will taxpayers be protected?
However, the afternoon session consisted of an impressive panel of experts -- three of them financial wizards. Their conclusion was the the fall of Detroit's automakers would have a disastrous effect on the already devastated U.S. economy.
Posted by Michelle Krebs at 12:09 PM under Chrysler , Companies , Featured , Ford , GM , News | Comments (3) | digg this | Seed Newsvine
I hate to be a broken record but...
PLEASE PLEASE PLEASE write an article demanding no stock options for executives and even repealing those that exist and other forms of obscene and immoral pay. Also, Wagoner must go and members of the board who showed terrible judgement for at least the last 15 years.
Michelle, I know these people are your bread and butter but do the right thing and call them out on the carpet. They must not profit. They have not earned another chance at taxpayer expense. If this is about jobs, economic and national security then any future that is morally just must include a GM without Wagoner and many of his high ranking supporters. Remember, these people can to Washington 2 weeks ago and said they had no issues with current management.
I am begging you Michelle. Please write the article. Send it to the DFP. Scream it from the mountain tops. The UAW has given up much and is about to give up more. Call for Wagoner to fall on his sword.
Posted by: georgehughes35 | December 05, 2008 at 2:08 PM
Wagner and Mulally have already said they will work for $1 a year. Bonuses and such have been suspended. Ford is selling its aircraft. Paper instead of drycleaned linen napkins in the executive dining room. GM does need more motorheads and fewer bean counters running it, though.
The American automobile and supplier industry early in the last century created and sustained the high standard of living that we still enjoy today.The vast middlle class was largely forged and assembled in their plants.
While they had little foreign competition, generous wages and benefits, the "legacy costs", proliferated, which today allows a substantial portion of our seniors to live healthy, productive, prosperous lives long after retirement.
We hear a lot now about the excesses of the UAW agreements of the past and the further concessions
that are likely to be made as a condition for the bridge loans.
I think that the UAW membership has given up enough. It's high time that the playing field known as the American market is leveled.
To help offset the legacy costs, of the Detroit Three, a surcharge should be applied to all foreign nameplate vehicles assembled in this country. For without the good pay over the generations, there wouldn't be the market the foreign OEMs enjoy selling in today, even as bad as it is.
Furthermore, keep the jobs bank; the new car buyers are the only ones who end up paying for it. With unemployment, the general public pays for most of it.
Posted by: fulcrumb | December 05, 2008 at 10:32 PM
BTW, screaming anything from a mountain top would be unproductive. Mountain tops are generally far removed from the folks you're trying to address, Michelle. it would be better to raise your voice a little while wearing five inch stiletto heels.
Posted by: fulcrumb | December 05, 2008 at 10:49 PM