[Congressional Record Volume 154, Number 183 (Monday, December 8, 2008)]
[Senate]
[Pages S10792-S10793]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     ECONOMIC AID TO AUTO INDUSTRY

  Mr. SPECTER. Mr. President, I have sought recognition to discuss the 
issue as to what Congress should do, if anything, with respect to 
economic aid to General Motors, Ford, and Chrysler. This is an issue 
which has been very much in the news, with the prospect that one or 
more of these companies might not survive--probably would not survive--
in the absence of some aid from the U.S. Government.
  Last Tuesday, I convened a meeting in Philadelphia attended by key 
executives from each of the Big Three, labor leaders, the head of the 
Pennsylvania AFL-CIO, the head of the Pennsylvania United Auto Workers 
Community Action Program, and the head of the Philadelphia Labor 
Council. Also in attendance were dealers, suppliers, and economists to 
review the situation, to get a background, to understand it better, to 
provide for the consideration this week of the issue which will be 
before the Senate.
  At that meeting, the Big Three painted a very gloomy picture. Ford 
was in the best position of the three, having arranged credit some time 
ago, and they had a request pending for some $9 billion in standby aid. 
They were not asking for it, but only want it available in case their 
situation came to the point where they actively needed it in order to 
survive. The CEO of Ford said that if the $9 billion was requested and 
received, he would then serve for a dollar a year.
  The projections from General Motors and Chrysler were considerably 
gloomier than Ford, with the statements made that if they did not get 
aid by the end of the year, they might have to go into bankruptcy, or 
to Chapter 11 bankruptcy proceedings. The suppliers were very concerned 
about the impact on their situation. The auto dealers were similarly 
concerned. Labor is very worried about the loss of jobs. So it was a 
very gloomy meeting overall.
  On Thursday, I convened a meeting in the Lehigh Valley. We did not 
have representatives of the Big Three, but we did have labor locally, 
dealers, bankers, economists who evaluated that situation. I joined 
with Senators Levin, Stabenow, Bond, Voinovich, and Brown on November 
20 in endorsing legislation to assist the Big Three, to say that it is 
something I would be willing to consider in light of the projected 
difficulties and the ripple effect it could have on the economy.
  My statement in the news conference which we held and a statement on 
the Senate floor was that my view was limited to consideration of such 
economic aid conditioned on the Big Three having plans to move forward 
which would present the realistic likelihood that they would be able to 
succeed. Considerable attention was given in the meetings which I held 
last week in Pennsylvania to the alternative of bankruptcy, and there 
have been many who have said bankruptcy would be the appropriate course 
as bankruptcy proceedings were held with the steel industry and the 
airlines, and that was the way to resolve the issue if the Big Three 
could not survive. One point which all of the Big Three agreed upon was 
that if one failed, they were all going to fail.
  The considerations with respect to bankruptcy which were considered 
at the two meetings I held were the contention that bankruptcy would be 
unacceptable to have the survival or having the Big Three come out of 
bankruptcy because of the difference between the automobile 
manufacturer situation contrasted with the steel industry or with the 
airlines. When buyers are looking for a car or looking for a warranty, 
they expect the companies to be in existence for protracted periods of 
time, so that the argument was made that Chapter 11 proceedings or 
bankruptcy generally would not be acceptable.
  I commented at these meetings, as I did on the Senate floor and in 
the news conference which the six Senators had on November 20, that the 
public sentiment is very much opposed to bailouts. After the $700 
billion legislation was passed on October 3, I traveled the State of 
Pennsylvania and had town meetings. I found the temperature of my 
constituents was at the boiling point, 212 Fahrenheit, and, in fact, 
the thermometers were broken. I commented to the town meeting attendees 
that the vote which was taken in the Senate was a strong vote--74 to 
25--which was a very strong vote, because of the potentially 
catastrophic consequences of what would happen to the economy. We 
didn't like the bailout of Bear Stearns or the bailout of AIG, and 
Lehman Brothers was not bailed out, and there were major regulatory 
problems which would be addressed by the Congress. Those who had made 
false representations on the balance sheets saying that the companies 
were worth falsified figures, knowing them to be false--that is fraud--
and there were investigations, criminal investigations underway, and 
that as in the Enron situation, people could go to jail for making 
those false representations. But I make that comment because of the 
public view which is opposed to the so-called bailouts; that it ought 
not to be the Government which picks winners and losers, but it ought 
to be the market which picks winners and losers. I repeat what I have 
said in prior floor statements which is that the Big Three have a very 
steep burden of proof and that the Big Three will have to come up with 
a plan which is reasonably and realistically calculated to succeed. We 
are now talking about various oversight provisions, talking about 
limited compensation, golden parachute plans which will make the Big 
Three competitive in a very difficult market, and

[[Page S10793]]

taking a look at the drastic reduction of automobile sales. But one 
factor came through loudly and clearly, and that was the potential 
consequences if the automotive industry--the Big Three--collapse, that 
we would be without the major portion of the industrial base in the 
United States, which as we all know in time of national emergency, in 
time of war, is indispensable for the defense of our country.
  So my staff and I and my colleagues are all taking a very close look 
at the proposals which the Big Three have made. I had a request to meet 
with General Motors and we will be doing that tomorrow. We are talking 
to a lot of people who were totally opposed to economic aid from the 
Federal Government. So we have to weigh the consequences as to what 
happens if economic aid is not given. It is hard to calculate what the 
consequences will be on the economy, but some of the predictions are 
virtually catastrophic. We must weigh that against the likelihood of 
the success of the plans, and it all depends on the quality of those 
plans.
  I thank the Chair. I know Senator Dorgan is close at hand, but in the 
absence of any other Senator seeking recognition, I suggest the absence 
of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the role.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DORGAN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. DORGAN. Mr. President, I ask unanimous consent that the Senator 
from New Mexico be recognized for 1 minute, I believe, and following 
which I would be recognized.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  The Senator from New Mexico is recognized.
  Mr. BINGAMAN. Mr. President, I thank my colleague.

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