Washington – Senator Evan Bayh made the following opening statement Tuesday at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, urging his colleagues to support action to help the struggling domestic American auto industry:

These are historic times. We face what the chairman of the Federal Reserve has described as the greatest financial panic since the 1930s. That has contributed, at least in part, to the greatest real downturn in the economy since at least the early 1980s, possibly before then. It is the first significant economic downturn since the advent of globalization, which means that rather than having some parts of the world growing more rapidly to serve as a countervailing force to weakness at home, instead weakness in one part of the world begets further weakness. We run the risks of an accelerating economic decline around the world.

These are unprecedented times that have led our government to take a variety of unprecedented steps, none of which would be found in your Economics 101 textbook.

We have intervened in the banking sector, taking significant equity stakes in the largest banks of our country. We have intervened in the insurance sector, virtually taking over one of the largest insurance companies in the world.

We have essentially taken over Fannie Mae and Freddie Mac, the government sponsored enterprises. We have moved to stabilize the money market system. We are looking at the credit card situation and student loans. We’re now even debating whether entire states and municipalities may need financial assistance from our government to weather these unprecedented and unpredicted times.

All of this has led to a great deal of instability, fragility, and unpredictability. This is not the time to add greater instability to the situation.

If we allow tens of thousands of ordinary people to lose their jobs, thousands of small businesses, suppliers, dealerships and others to be imperiled, three of the largest corporations in the country to run the risk of going down, it will have unintended consequences, none of them positive. Some of them quite possibly will be severe.

This is not the right moment in our economic situation to allow such a state of affairs to take place. Now, that doesn’t mean we should just do anything.

All of the major stakeholders need to step up and make contributions to setting this right. Otherwise, we’re not going to be able to get the job done, and the help might not be forthcoming.

Fortunately, we do have a model to build off. That was in 1979 with the Chrysler Corporation. In that particular case, all the stakeholders did step up. The right decisions were made. And the net result was that the jobs were saved, the company was saved, and the taxpayers were repaid ahead of time and actually generated a profit.

If we do this correctly, it can be a win-win-win situation.

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