Washington, DC – U.S. Rep. John Hall (D-NY19) released the following statement today regarding legislation that passed the House last night providing rescue loans for and mandating restructuring of the auto industry. The Auto Industry Financing and Restructuring Act (H.R. 7321) passed the House by a vote of 237 – 170 and is now headed to the Senate for consideration. Hall voted yes.
"I am disappointed that the House has once again been forced to consider legislation to rescue some of America's most important and renowned companies. I regret the need to cast this vote, but I believe voting for this legislation is the better choice.
"Congress cannot allow the Big Three automakers to go out of business. They are too important to our economy and our national security. In my district alone there are more than 3,000 jobs directly dependent on the auto industry, accounting for salaries of more than $150 million annually. The industry is a significant contributor to the tax base of New York State, which is already facing severe financial turmoil.
"Beyond its economic importance, maintaining a successful domestic automobile industry is vital for the long term interests of the United States. There are certain industries which we must maintain domestically for national security reasons. During World War II, the automobile industry led the way in the conversion to a war economy by altering their manufacturing plants to make armored vehicles and tanks instead of cars and trucks. Few companies still maintain that capacity, and so for that reason alone we cannot let the industry fail.
"We need to help the auto industry, but I do not believe we should be giving a blank check to anyone. That is why I appreciate the work this Congress has done to make the legislation tolerable. This is not a give away. We are voting on a loan which I expect to be paid back, and paid back with interest. It has protections for the taxpayers. As long as the loan remains outstanding, no dividends can be paid, no executive bonuses or golden parachutes can be issued and the government will receive warrants for equity value equivalent to part of the value of the loan. In addition, this loan takes legal priority over every other debt and obligation the companies face.
"I am disappointed about provisions that this bill does not contain. I recognize that the presidentially appointed overseer will have a great deal of power to force specific changes in the way our nation's auto industry does business, but I would have preferred to see many of these changes specifically tied to the loans by this legislation. For example, in their presentations last week, the CEOs of General Motors, Ford and Chrysler claimed that with these loans they will be able to meet and even exceed the increased fuel economy (CAFE) standards Congress finally mandated last year. I believe that they should be required to do so by the legislation. It is critical that, over the coming months, Congress exercises the necessary oversight to make sure that the Big Three keep their word.
"I would have liked to see clear goals that required a set percentage of products produced by the auto companies to be high-efficiency vehicles. I would have liked to see a commitment from the automakers to make hybrid technology options more prevalent and available more often. I would like to see more substantial investment made into research and development for new, greener, energy-efficient technology. Perhaps most importantly, I would have liked to see a guarantee of true reform, starting from the top, in how these companies do business and the kinds of cars they produce and sell. Taxpayer-supported companies cannot be allowed to continue the sort of ill-advised business decisions the Industry have been making the last few years.
"I hope that the Auto Industry Financing and Restructuring Act will be the first step towards the beginning of a new era for US automakers. Congress is doing what we must, stepping in and saving the manufacturers, but we are not doing so without a commitment for genuine and long lasting reform on their part."
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