The top Republican on the House Financial Services Committee said
he's opposed to a $25 billion loan package for the Big Three.
By Chris Isidore, CNNMoney.com senior writer
Last Updated: November 19, 2008: 2:11 PM ET
NEW YORK (CNNMoney.com) -- Auto industry
executives were back on Capitol Hill Wednesday morning to ask for a federal
bailout but they once again faced an uphill battle in winning the necessary
support from Congress.
Before the CEOs of General Motors (GM, Fortune 500),
Ford Motor (F, Fortune 500)
and Chrysler LLC even started their comments before the House Financial
Services Committee, they faced criticism from the committee's ranking
Republican, Spencer Bachus of Alabama.
"My constituents do not
understand why their tax dollars should go to support what they consider less
efficient businesses," said Bachus, adding that most of his constituents
earn less money than the autoworkers whose jobs would be saved.
But House Financial Services
Chairman Barney Frank, D-Mass., said it was wrong to focus on the pay of
autoworkers when there was not much discussion of the pay of the average worker
at financial firms that got government bailouts in October.
"I think the average AIG employee
makes a good deal more than the auto workers," he said.
Frank criticized those who argued
the automakers should file for bankruptcy in order to shed contracts with the
unions and dealerships, saying that was "bankruptcy as a spectator
sport." He said it would be unwise to ignore the damage that would be done
to the overall economy if one or more automakers went bankrupt.
Bachus asked UAW President Ron
Gettelfinger if the union would be willing to reopen the labor contract to
grant more concessions. Gettelfinger said the union is always talking with the
automakers but added that negotiations cannot be a one-way street.
"The UAW can't be the low
hanging fruit. While we're at the table, we're asking that others come in and
sacrifice as well," he said.
'When will you run out of money?'
The
industry is asking for $25 billion in loans to tie them over through the
current downturn and is offering the government an equity stake in the
companies if they get the help.
The
bailout drew support from Republican and Democratic members of the Michigan congressional
delegation, who also testified before the committee.
"I
think what's missing is a sense of urgency," said Sander Levin, a Democrat
from Michigan.
"We're thinking of leaving here and taking the risk of bankruptcy? There's
a looming risk."
General
Motors announced Nov. 7 that it could run out of the cash needed for operations
by the end of this year or early next year without federal assistance.
In
testimony before the Senate Banking Committee Tuesday, Chrysler CEO Robert
Nardelli said his company is also at risk of running out of the cash it needs
to operate in that time frame.
But
Paul Kanjorski, D-Pa., said he wasn't sure it was proper to be bailing out the
automakers and he didn't like the demand that action be taken in this lame duck
session of Congress.
"I
am not yet convinced that we must act so rashly," he said. "The
American public demands that we get this right."
Kanjorski
asked GM CEO Rick Wagoner for the minimum amount of money necessary to keep GM
afloat through March 30 in order to give Congress more time to work on a
bailout package. "When will you run out of money?" he asked.
But
Wagoner wouldn't give more details beyond the company's previous statement that
it could be out of cash later this year or early next year.
"I
don't believe we have the luxury of a lot of time," he said, and when
pressed for an exact deadline, responded, "I can't tell you that for
certain."
Nardelli
said Chrysler had looked at the option of filing for bankruptcy. But he said
even if the company shed costs and contracts under bankruptcy, it would find
suppliers demanding cash on delivery of parts, which would cause an even
greater cash crunch.
"It
would turn us upside down, quicker and deeper than we are today," he said.
Rep.
Randy Neugebauer, R-Texas, said that it was wrong for Congress to pick winners
and losers in the economy.
"Where
do we let the marketplace do what what it does best, determine who to reward,
who not to reward?" he asked.
Wagoner
said the company had made many cuts in past years and earlier this year to try
to avoid seeking federal help but added there was a huge risk for the economy
if the bailout isn't approved.
"I
can assure you...we don't like to be here asking for this," he said.
"At this point without injections of liquidity, I think it's reasonably
probable that some portion if not all of the domestic industry will not
survive. The way I would explain it to your constituents is it's going to
prevent the United States
from entering into an economic depression in my view."
Several
supporters of a bailout pointed out that China
and some governments in Europe are considering
bailing out their own automakers.
"It
is unacceptable for America
not to make its own cars," said Rep. Carolyn Maloney, D-N.Y. "No
other country would let a major industry fail."
But other
Democrats seemed to be unhappy with the idea of helping automakers as well.
Rep.
Maxine Waters, D-CA, said she thought that the bailout legislation would pass
but complained about automakers' arrogance and lack of support for
minority-owned dealerships.
"What
we basically get here are the big boys, well connected and too big to fail,"
she said. "In the final analysis, people are going to roll and you'll get
what you're asking for."
Gary
Ackerman, D-NY, talked about how he couldn't get a new Cadillac in the color he
wanted and couldn't get anyone to answer questions about problems with his GPS
system. But he pointed out that his wife has had great service with an imported
car.
"Maybe
you can tell us what you're actually going to do to sell cars people
want," he said. "Somebody heard that we're giving out free money in Washington. They're
showing up from all over the place. But you don't want to put your last
tourniquet on a dead guy."
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