Sen. Carper: Automaker Proposal Before Senate Banking Committee
WASHINGTON – A member of the Senate Banking Committee, Sen. Tom Carper (D-Del.) issued the following statement in response to the Big 3 automakers’ Senate hearing and to plans they submitted this week to reorganize and make their companies more competitive. Sen. Carper said:
"I believe that Dr. Mark Zandi, chief economist and cofounder of Moody’s Economy.com, pretty much nailed it in his testimony at today’s hearing. First, the federal government should provide financial aid in the form of loan guarantees to the domestic auto industry rather than stand aside and let it go under, further diminishing America’s manufacturing base.
Second, that assistance should come in two traunches or stages. The first half of the $34 billion that GM and Chrysler say they need to avoid bankruptcy now should come with warrants to compensate taxpayers for the risk they would be assuming under the loan guarantees.
Third, in order for the second traunch of assistance to flow, again via loan guarantees, significant additional restructuring must occur within the companies seeking assistance whereby all the relevant stakeholders agree – under the auspices of an oversight board or a trustee – to sacrifice further to better ensure the long-term recovery of these companies.
Fourth, if that additional restructuring is not forthcoming, then no second traunch of loans guaranteed by the government would be made. Instead, the next Administration and Congress should work to make certain that an orderly bankruptcy process will unfold sometime next spring by providing appropriate financing in bankruptcy and by guaranteeing warranties on new vehicles sold.
It’s ironic to me that the Bush Administration has supported providing $150 billion of federal assistance to one large insurance company but doesn’t support trying to save the domestic auto industry for a fraction of that amount."