"I am encouraged and more than a little relieved to hear that the Administration has agreed to provide a financial lifeline to our domestic auto industry. It is the right thing to do. Bankruptcy would do more than cripple both companies. It would likely have a ripple effect, causing major job losses among suppliers at the worst possible time for our struggling economy. This decision, however, sets the stage for eventually allowing the Big 3 to emerge from this near-death experience as lower-cost, more viable companies as the economy recovers.
"The Administration's proposal to use TARP funds with conditions to ensure the taxpayers' investment is protected looks very similar to the proposal the Senate considered last week. It will provide $17.4 billion bridge loan to ensure that our domestic auto industry survives difficult market conditions and a shrinking economy while they take steps to modernize and restructure. That proposed measure mandates taxpayer protections (including warrants and preferred stock in the companies), strong oversight and limits on executive compensation, and stipulated that the Big 3 continue restructuring under the direction of the Secretary of the Treasury and a possible future "car czar."
"This restructuring will have to include a write-down of the companies' debt by two-thirds as well as a renegotiation of wages and benefits for workers to ensure the companies are competitive. Further, GM and Chrysler would have to agree to management concessions, such as limits on executive pay and the elimination of corporate jets, in order to receive the bridge loan. The companies' restructuring plans are due by March 30 and must demonstrate that they are financially viable. If the companies do not comply with these requirements, their loans could be recalled.
"Much like the federal government did in the early 1980s when it provided loan guarantees to keep Chrysler afloat, and later realized a sizeable return on that investment, this legislation could have helped preserve the short-term financial solvency of the auto industry and provided long-term financial rewards for taxpayers.
"It is important that GM and Chrysler put together restructuring plans that include shared sacrifice and concessions from all involved, including lenders, dealers, labor, suppliers, management and bondholders.
"I am encouraged that the Administration's proposal will give the Big 3 the time they need to do this and emerge as stronger companies that can help lead our country out of the current recession.
"Finally, it is important to remember that it is not only the Big Three that need help. Thousands of auto workers across this country, and at home in
"Since 1976, I have had the privilege of working for the people of
"It is imperative that we make sure these folks have the opportunity to be trained for new jobs in other industries, enabling them to again make a decent income to support themselves and their families. I will work with the new Congress and Administration to include this in an economic stimulus package next year."