No clear road yet for carmakers' bailout
A more humble collection of auto industry CEOs came calling on Congress today. But the jury's still out on whether their latest proposal will get them the money they need. Nancy Marshall Genzer reports.
Making their case for a $34 billion government bailout of the U.S. auto industry are, from left, General Motors CEO Richard Wagoner, United Auto Workers President Ron Gettelfinger, Ford Motor Company CEO Alan Mulally, and Chrysler CEO Robert Nardelli. (Chip Somodevilla/Getty Images)
More on The Economy, Auto Industry, Politics, America's Financial Crisis
TEXT OF STORY
Kai Ryssdal: It was a more humble collection of auto industry CEOs that came calling on Congress this morning. Last time of course they were sent home with stern warnings to come back better prepared.
Today they did.
But the jury's still out on whether it's going to get them the money they need.
From Washington, Marketplace's Nancy Marshall Genzer reports.
Nancy Marshall Genzer: Talk about inflation. Two weeks ago the automakers asked Congress for $25 billion. Today they told the Senate Banking Committee they needed $34 billion. Republican Richard Shelby of Alabama complained about the high price tag. And he said the automakers' restructuring plans were too vague.
Richard Shelby: If you made this presentation to get a bank loan, I suspect that any sensible banker would summarily dismiss your request.
But much of the Senate hearing focused on how to get money to the automakers, not whether they deserved it. Should the Fed step in? New York Democrat Charles Schumer suggested creating an auto czar to oversee any federal funding. Schumer asked GM CEO Rick Wagoner what he thought of that.
Charles Schumer: Would you agree with this kind of model?
Rick Wagoner: Um, it would be very helpful for us to have someone to work with on this.
Helpful? To have a czar peering over your shoulder? Yes, Wagoner said, bring it on.
Chrysler CEO Bob Nardelli and Ford CEO Alan Mulally chimed in -- a czar would be fine with them too. They also agreed to an oversight board.
Morningstar auto analyst Dave Whiston says the CEOs may have to agree to more oversight, but it could complicate things.
Dave Whiston: You have to trust the management of the companies and loan them the money and let them be the experts that they are in running an auto company and not force them to go through an extra layer of oversight.
But Congress has its own overseers -- the voters. In a recent CNN poll, 61 percent of those surveyed opposed bailing out the automakers.
In Washington, I'm Nancy Marshall Genzer for Marketplace.
Ryssdal: There's an interesting side note to the hearings today. Banking Committe Chairman Chris Dodd had apparently wanted some familiar faces at the witness table. But both Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson had prior engagements, which didn't sit too well with Senator Dodd.
CHRISTOPHER DODD: The Secretary of the Treasury is in China right now. It's time to come home. We've got a serious problem on our hands. And I reallize he's got a meeting over there, but we need him here. And I need the Federal Reserve to step up as well.
Comments
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From Raleigh, NC, 12/05/2008
Letting some of the big American automakers go into bankruptcy might very well be the best thing for them. Any threats that the auto industry in America will disappear is simply spreading FUD. GM would likely emerge from bankruptcy a leaner and more effective company. I'm not sure they can succeed even then, but I am more confident that giving GM taxpayer money will not help, either.
The problem is leadership - and the evidence is in the difference between the two visits of the Big3 CEOs to the capital. On the second visit, they arrived in green vehicles instead of expensive private jets. Good leaders would have done that the first time.
Let them go into bankruptcy and shed the fat. Sometimes, businesses must fail to succeed. For the record, I was against the failed 700B financial industry bailout, as well.
From la crescent, MN, 12/04/2008
loss of american auto builders equal a loss of massive amounts of ab;ity to fend off a threat to this country-loss of steel worker, shippers, all vendors sending parts to the assy plants,it just goes on and on-we all cannot teach, or be medical people,it is painfull but the mnfgr's supply a huge base of jobs as the lines of suuplier are traced out.everybody spends and helps the over all economy.
From Mesa, AZ, 12/04/2008
Am I the only one who sees the obvious solution to this problem? The first step is to stop looking for someone to blame, it's too late to worry about the past. The second step is to accept the fact that there is no point in making a lot of cars in Detroit which will be almost as good as the ones being made in Virginia (Toyota, Honda, etc) but will cost a little more. Third, we need to realize that if the Southwest is going to be the Saudi Arabia of solar power, then we are going to need millions of reflectors and other components to build these solar powerplants. So, instead of spending 25 billion dollars to convert factories to build cars that won't sell, why not spend the same money to start building solar component for California and the rest of the world, and save a lot of jobs! If the government is going to subsidise something, I would rather it be something for the future, not something from the past!
From Fort Worth, TX, 12/04/2008
It is amazing how the car companies are being made the fall guys! What a cunning way of putting in code words? Banks and financials got away with 700 billion and it was termed a rescue package while the 37 billion $ loan to car makers are being termed bailout. The bad times show our true colors. Labor and hard working people should take notice of what posturing is being made by which people in congress. Congress voted $700 billion without any debate and now car makers are being grilled for a loan. CEO of car companies are willing to take $1 as pay - let congress and other people who did not provide oversight when it was due come forward and take their share of blame and make some sacrifice. Let them hold some fund raising dinners and give that money back to treasury and tax payers.
From minneapolis, MN, 12/04/2008
you can't blame the car companies for just doing what everyother company does and thats make money!!They built suv'sand minivans and people bought them!at the same time they all offered small higher milage cars and not many bought them!now people want to blame the big three I DON'T THINK SO!! blame those who bought those gas guzzlers!!
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