[Congressional Record Volume 155, Number 67 (Monday, May 4, 2009)]
[House]
[Pages H5086-H5091]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          BIG THREE AUTOMAKERS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 2009, the gentleman from Texas (Mr. Carter) is recognized 
for 60 minutes as the designee of the minority leader.
  Mr. CARTER. I think most people know I spent a little time in the 
courts of this country. I am going to start off this conversation by 
saying that I'm not a bankruptcy judge, nor a bankruptcy litigant. And, 
in fact, I do not claim any expertise whatsoever in the area of 
bankruptcy. But I have some serious concerns that bother me about some 
things that are going on, and I would hope at least that the American 
people have these same concerns, because I really believe that the 
third branch of our government, the Judiciary, is there for recourse 
for all citizens, big and small. I think they are the fallback 
position, where politics should not interfere, but due process should 
prevail.
  I believe that the protection of the minority interests of whatever 
we may be doing, it is best protected in the courts of our country.
  I look at what is going on tonight and have been trying to figure 
out--and, I'm going to tell you, you're going to hear me ask a lot of 
questions tonight that I would like someone to give answers to, because 
I don't understand where things are going. But I'm looking at what is 
going on with the automobile industry in this country.
  You know, the big three automakers in this country have been symbols 
of corporate greatness for my entire lifetime. We all can have a debate 
about who made the best car, what is the best car ever made, but most 
Americans would argue for some form of a GM car or Ford or a Chrysler 
as the best car they ever drove. Our grandfathers and our fathers have 
owned these vehicles and they have worked with these companies, and 
they have been respected and honored across this Nation.
  Now, these companies are in trouble. At least two of them seem to be 
in a lot of trouble--Chrysler and General Motors. At least it has been 
indicated through the media that Chrysler is going to be seeking 
recourse in the bankruptcy courts.
  The reason I say it has been indicated is because, in the normal 
course of things, what you normally see is that the board of directors, 
through its chief executive officer, will have a vote or will discuss 
the economic situation of the company and will come up with the fact 
that it's just not going to be viable. That at least they need the 
reorganization and the cancellation of some of their debts to be able 
to maintain order within the company and be a viable company.
  But, in the case of Chrysler, the announcement was made by President 
Barack Obama to the media in a speech that he made announcing Chrysler 
would go into bankruptcy--at least it's my personal opinion that I 
don't believe at that time Mr. Obama held any position in the corporate 
structure of Chrysler to speak on their behalf, other than he is the 
President of the United States and he may have more knowledge than some 
of the rest of us, but it would be normal for Chrysler to make that 
announcement.
  But then it would be normal for the board of directors of Chrysler to 
fire the executives of their company if they are not doing a good job, 
and it would be normal for the board of directors of General Motors to 
do the hiring and firing of executives that they have hired to manage 
their company.
  March 29 of this year, President Obama forced the CEO of General 
Motors, Rick Wagoner, to resign from his post. As far as anyone can 
tell, this marks the first time in American history that a United 
States President has directly intervened in the daily running of an 
American business.
  So we start with that announcement. The CEO, Mr. Wagoner, is fired by 
the President. Then, the President announces--not the CEO of Chrysler, 
but the President--announces the bankruptcy of Chrysler.
  This bankruptcy, under normal circumstances, would go before a 
bankruptcy judge. And we have a set of laws that are established in 
this country--they are called creditors' rights. And we have creditors 
that stand in different positions when it comes to being repaid on 
debts, depending on whether they are secured or unsecured creditors, 
and we have a battery of laws that make that determination, and the 
bankruptcy court, doing a way more complicated analysis than I just 
did, comes up with who gets paid what and when and where and how and 
what happens; what assets are sold, all or part, and these are laws 
that are on the books that pretty well anybody can go see, and they are 
from time-to-time changed by the legislative body.

                              {time}  1945

  But we understand now from what the newspapers tell us that the Obama 
administration has announced the deal they expect to be rubber-stamped 
by the bankruptcy court. That deal is, according to the papers, a 55 
percent ownership of Chrysler will be owned by the UAW, United Auto 
Workers. So the laborers of that company will be owning 55 percent of 
Chrysler. Then, 35 percent of Chrysler will be owned by Fiat, a foreign 
company out of Italy, and other places, I am sure. Then, 8 percent of 
Chrysler will be owned by the United States Government, and 2 percent 
of Chrysler will be owned by the Canadian Government.
  I suppose, if we look at who is normally involved in corporate 
structure, you would have stockholders and preferred stockholders that 
are probably in there someplace; and, it looks like, to me, that they 
are divested of any interest in this trade.
  Now, let me say that this should be something that the court makes a 
decision based upon creditors law, but it seems to be this is being 
shoved into the hands of the court, with an announcement by the White 
House saying: This is a settlement these people have agreed to, and you 
will do it this way.
  I wonder, who is looking out for the stockholder? I don't own any 
Chrysler stock, but if I owned a share of Chrysler stock I would think 
that at one point in time I owned a portion of the Chrysler 
Corporation, that I was one of the owners of the business. Because we 
can cut through all the mystique of a corporate structure, the mystique 
that many call the bad guys, the big corporations. But big corporations 
are nothing more than a gathering of people who are called shareholders 
who invest their hard-earned money into a company, expecting that 
company to make profits and, in turn, return that value to them by an 
increase in stock price and possibly a dividend. It is Americans and 
others investing in America. That is what a corporation is all about.
  Now, whether it is a small corporation that is in Round Rock, Texas, 
where I come from, that maybe has 20 shareholders, or whether it is a 
giant corporation like the Chrysler Corporation that probably has, who 
knows, a million shareholders, those people have invested their money 
and they have some interest in that business, and through their 
representatives that they elect to the board, they supposedly have a 
voice in what is going on. Yet, if this deal is the deal we are talking 
about, I don't see where these shareholders, whether they be preferred 
or whether they be ordinary stock shareholders, I don't see where they 
are accommodated at all.
  You can hear some criticize and say that the Federal Government is 
taking over the automobile industry. Of course, I am sure that they 
would argue: Well, certainly not in the case of Chrysler, because we 
are not going to own but 8 percent of Chrysler. But their agent, the 
group that donates 99

[[Page H5087]]

percent, by the last report, of their political donations to the 
Democratic Party, the UAW, owns a controlling interest, 55 percent.
  There seems to be an assumption that when this is announced by the 
White House that this is the deal, even though it seems that some of 
these preferred creditors have actually stood up a little bit and said, 
wait a minute, we didn't make this deal. But it seems that these people 
are then, by the White House, called not cooperative or other things.
  In fact, it was reported in the newspapers that they twisted the arms 
of these preferred creditors to a point where they felt like they were 
being threatened and not being able to look out for the interest of 
their people. And, of course, the finger was pointed to them as the big 
rich preferred creditors, the big rich bondholders, when, in reality, 
these companies were stepping up and saying: We are not going to be 
threatened by the administration. We are going to stand firm. Because 
it is not just the couple of great big rich folks. They have got lots 
of people, including other people's pension funds, that are invested in 
their hedge funds and their groups that own this interest.

  According to Thomas Lauria, Global Practice Head of the Financial 
Restructuring & Insolvency Group at White & Case, said that Perella 
Weinberg Partners was directly threatened by the White House and, in 
essence, compelled to withdraw its opposition to the Obama Chrysler 
restructuring deal under the threat that the full force of the White 
House press corps would destroy its reputation if it continued to 
fight.
  That statement should concern us all. The White House press corps is 
supposed to be a press corps that is gathering news and making 
inquiries, not becoming an arm of the White House or the White House's 
restructuring force that they are putting together to restructure this 
deal for Chrysler. It should concern every American that the White 
House is threatening the use of those people who sit in those press 
conferences supposedly asking the tough questions of the President, 
they are threatening that they can use them to harm these individual 
bondholders, these bondholder companies. I think there is something 
tragically wrong with that.
  One of the questions I ask is where are our courts in this situation. 
I mean, the stockholders are being left with their interests basically 
dissolved in the Chrysler Corporation. The bondholders are being 
threatened by the press corps of the White House to the detriment of 
their shareholders to take possibly 25 cents or less on the dollar as 
part of the deal, when there are creditors' rights laws that should be 
looked to by the bankruptcy court. And if you are not getting good 
recourse from the bankruptcy courts, there are other courts you can go 
to.
  I am very disappointed that there seems to be some weakness that the 
courts are not standing up for what could be, and in my estimation 
would be, a large body of people whose defined rights are being forced 
away from them by the heavy hand of the White House. And the White 
House heavy hand is a dangerous place to be.
  I will remind you that President Harry Truman seized the Nation's 
steel mills during the Korean war in order to avoid a shutdown during a 
strike. He could have sought an injunction barring the strike under the 
Taft-Hartley law, but instead he chose to seize based on his powers as 
Commander in Chief. He specifically notified Congress of the right to 
reverse or endorse his action, but Congress chose not to act. The 
Supreme Court overturned Truman's Executive order.
  The legal questions were: Has the Congress granted the President the 
power to take possession of the property? The answer was ``no.'' Does 
the Constitution grant the President the power to take possession of 
the property? The answer was ``no.'' Is Truman's Executive order in 
compliance with the Constitution? And the answer was ``no.''
  The opinion written by Justice Black said: All powers of the 
Presidency are contained in the Constitution or in subsequent acts of 
Congress granting specific powers to the Executive. The contention that 
the aggregate power of the Constitution and acts of Congress create 
new, more far-reaching powers was rejected by the Court. Under the 
Taft-Hartley Act of 1947, Congress has addressed the precise issue of 
labor strikes and national security, and has chosen not to grant the 
President the right to break a strike.
  Likewise, nowhere in the Constitution is the Executive granted the 
right to seize power. An evaluation says Youngstown was instrumental in 
reaffirming that the President cannot legislate, only execute 
legislation passed by the Congress.
  Black wrote: The Constitution limits his function in the lawmaking 
process to recommending of laws he thinks wise and the vetoing of laws 
he thinks bad. The ruling limits the nature of the Executive order to 
carrying out the limitation of laws already established by Congress.
  Now, I guess the question that we would have in what is going on in 
the Chrysler case, and to some extent the General Motors case, which we 
will get to in a little while: Has Congress granted the President the 
power to take control of the negotiations of a private corporation and 
attempt to make a settlement to go before the bankruptcy court? I would 
certainly argue that the Congress has not given the President that 
power, nor do I think that the Constitution grants President Obama the 
power to take control of the negotiations to be submitted to a 
bankruptcy court and to threaten those who choose not to enter into 
these negotiations with abuse by the White House press corps that would 
harm their business. I don't think the Constitution in any way, form, 
or fashion grants that power to the President of the United States. And 
I think what is going on with the White House and its heavy-handed 
manipulation of the duties and responsibilities of the bankruptcy court 
is nowhere granted by Congress or by the Constitution of the United 
States.
  I think Americans ought to be looking at this, and Americans ought to 
be concerned about this. These are private businesses owned by private 
people who borrowed money from other groups of people who either are 
shareholders or lenders in some form or fashion whose rights are 
defined by law. And for the President of the United States and the 
White House to intervene to force a settlement to be submitted to the 
court and then ask the court to basically rubber-stamp that settlement 
without looking to the protection of these other rights of the other 
individuals that are involved, to me, these raise questions that we 
need to be asking; because if the government can do this to the 
Chrysler Corporation and the millions of stockholders that own Chrysler 
Corporation, who else could they do it to that stood in the way of 
their negotiations? And where does the Constitution or the Congress 
authorize the President of the United States to heavy-handedly 
negotiate in this private situation? And where does it authorize the 
turning over of 55 percent of the business to the laborers who work 
there in the form of the ownership by their union? And why isn't it 
quid pro quo, when you look at what that union had done?
  In 2008, according to reporting that has been done, according to Open 
Secrets, the UAW gave 99 percent of its political contributions to the 
Democrats in the 2008 cycle. If you give 99 percent, then you own 55 
percent of the company. Is that the way it is supposed to work? 
Shouldn't some court somewhere ask that question? Shouldn't some 
courageous litigant somewhere stand up for the rights of the 
stockholder, stand up for the rights of the bondholders, speak out for 
those preferred creditors? Shouldn't someone be going to court and 
speaking out on these people's behalf?

                              {time}  2000

  I have real concerns because I start from the premise that I believe 
that that third branch of government that I served in for 20 years is 
there for the protection of all Americans. That is what our court 
system is about. And if we are going to politicize--and as we look now 
to an appointment of a new Supreme Court Justice--if we are going to so 
politicize our court system as to take away the ability for the weaker 
party to have a voice through politics, then there is something wrong.
  We, as Americans, need to be asking that question, and I would 
challenge my colleagues to start thinking about this: At what point in 
time does the

[[Page H5088]]

President have to follow the Constitution, or at least does the 
Congress have to grant him powers before he can do these things?
  That is just Chrysler. Now, the GM deal, President Obama hasn't 
announced yet that they are going to the bankruptcy court. But they are 
trying to work out a settlement.
  Oh, going back to the Chrysler deal, doesn't it bother anyone that 
the deal we are making is taking control away from the American 
stockholders and from the board of directors of Chrysler and giving 
ownership to the labor union? I don't see any indication that the labor 
union is making the assumption of any of these debts or contributing 
any money to this project. They are just being rewarded for being a 
labor union. Now where is the logic in that? And then what are they 
going to do? Thirty-five percent of that is going to be Fiat. I have 
nothing against Fiat. I actually owned one at one time. So let me lay 
my cards on the table. It was a neat little yellow convertible, and my 
wife told me I couldn't keep it, but I owned one for a while, and it 
was fun and a good car.
  But now we are basically turning Chrysler over to a foreign company. 
I don't have anything against foreign companies. We are in an 
international world. But let's get a reality check here. The President 
of the United States is putting together a deal to turn Chrysler over 
to a foreign company in a foreign country. And you can bet your boots 
that one of these days the word ``Chrysler'' won't be in our vocabulary 
anymore. I hope and I wish Fiat all the best, but realize that it will 
be the ``Fiat Company of North America,'' or at least logic would seem 
to make one think so.
  All of this is to make sure that we meet a pledge that the President 
of the United States made to the UAW that he would protect their 
benefits and pensions. The government didn't protect the benefits and 
pensions of the Delta pilots when Delta went bankrupt. So why, all of a 
sudden, is the government going into ownership of this company and 
taking direct direction of this company to make sure that it benefits 
this labor union rather than another labor union? It is a question that 
we ought to be asking. It is a question some court ought to be looking 
into. This concerns me.
  Before I go any further, I do want to go ahead and lay the supposed 
GM deal that the White House is telling us looks like this is what they 
are recommending, and I read this one on the front page of The Wall 
Street Journal. Fifty percent of General Motors will be owned by the 
United States Government; 39 percent of General Motors will be owned, 
again, by the UAW; 10 percent of the company would be owned by the 
bondholders, so at least the bondholders of General Motors are going to 
end up with 10 percent ownership. And the stockholders are going to do 
all right, too. They are going to go from at least more than 1 percent, 
they are going to go from some percentage of GM down to 1 percent. So 
if you're the proud owner of GM stock, then all of the stock that is 
out there is going to be worth 1 percent of General Motors.
  One of our Members was telling me that he owned, I forgot what he 
said, 1,000 shares of General Motors or something like that. The 
diluted price is estimated to be somewhere between two cents and a 
nickel a share for General Motors stock--General Motors, that great 
icon of American industrial might. Many pension funds, teachers' 
retirement funds and other people invested in them because they were 
like the American flag. They were American industry at its best. And 
now all those people and all those funds that invested in stock are 
going to own 1 percent of a company where they used to own most of the 
company.
  They are going to take the burden, the great burden, of the mistakes 
made by General Motors and, I would argue, that overwhelming pressure 
put on by the United Auto Workers to maintain, at all costs, their 
right of contract. There are written and unwritten contracts, but the 
contract is sacred in America, and the unions certainly stand up for 
the rights under their contract. But under creditors' rights, there are 
rights, too, that are created by law. And a person who does something 
and buys stock or invests in a bond, those people have the right to 
rely upon the law to protect them, just like a contract. But it seems 
that every day as we go forward in the Obama administration, the 
sanctity of contracts seems to be of less and less importance, and, 
truthfully, that will be terrible for this Nation.
  I am very pleased and blessed to have my friend, a good friend from 
Iowa, Steve King, to be here with me tonight. I will yield to him such 
time as he may wish to consume.
  Mr. KING of Iowa. I thank the gentleman and judge from Texas for 
taking the lead and coming here to the floor to help convey this 
message across the country as he addresses you and as I address you, 
Madam Speaker. As I listen to this, the transition goes, the segue 
handoff goes to AIG. I happened to look at the AIG story that is there 
today. ``AIG nears sale of headquarters in Japan for $1 billion.'' We 
look at the AIG, the big Federal bailout that is there, the effort to 
block, after the fact, the bonus packages, the retention bonuses that 
were paid under the contract, the sanctity of the contract, as the 
judge said. And what happened was this process here in this Congress 
raced too far too fast. And there was a big TARP bill that passed last 
fall before the Presidential election. Half of it, $350 billion of 
that, was made available pretty close to right away. Another $350 
billion had to go to the next Congress. Most of that money was going to 
be spent by a Secretary of the Treasury to be named later by a 
President to be elected later, Madam Speaker, and that is what 
happened.
  So those $700 billion went forward, the $787 billion on the stimulus 
plan and the $410 billion on the omnibus spending bill, 1,222 pages 
stacked up that high. They arrived at 11 o'clock at night and were 
brought to the floor the following morning. We were asked to read 1,222 
pages, or have staff read all that, and figure out what was in it, and 
then figure out what was not in it and draw a good judgment on all of 
this. This was pushed through, shoehorned in and rammed through quickly 
for political reasons, I believe, Madam Speaker.
  The AIG loophole was actually written into the bill. We don't quite 
know yet whether it was the chairman of the Senate Finance Committee or 
whether it was the White House that actually had the most influence in 
that. We know there was communications going back and forth between the 
White House and the Chair of the Finance Committee and the Senate, and 
they wrote language in there that was a loophole that allowed for 
major, major bonuses to be paid. First it was $165 million. Then 
it went up to $200 million. Then it got up to about $240 million that 
went into bonuses for people who had led a company into disastrous 
ruin.

  So now we are watching some of the spin-offs. This is some of the 
effort, some of the nationalization that goes on. Fannie Mae and 
Freddie Mac were nationalized. They were organizations, companies, that 
should have been capitalized and regulated. We tried to do that on the 
floor of the House of Representatives, Madam Speaker, and we were 
blocked at every turn by some effort on the part of Republicans and a 
big effort on the part of Democrats. They argued, especially right now 
the chairman of the Financial Services Committee came to this floor and 
argued, Fannie Mae and Freddie Mac are not in trouble. They don't need 
to be capitalized. They don't need to be regulated. I don't see any 
problem there. I'm going to oppose any efforts. The gentleman who is 
now the Chair undersells his persuasive ability. But many of us tried 
during that period of time.
  This thing unfolded with Fannie Mae and Freddie Mac being 
nationalized, AIG effectively being nationalized and spinning off the 
headquarters in Japan for $1 billion or so. And then we heard the 
gentleman from Texas, the judge, talk about Chrysler, well, formerly 
Daimler Chrysler, now Chrysler, and this push merger that goes on with 
Chrysler and Fiat--I never owned a Fiat. I want to make that clear to 
the gentleman from Texas. But I probably would have enjoyed it if I had 
had one--and the de facto nationalization of General Motors Company.
  Now, that should alarm Americans. It alarms me that there was a poll 
that went out about 1 month ago that found that only 53 percent of 
Americans said they believe in capitalism. Now I didn't see the exact 
text of the question. I

[[Page H5089]]

think they have to believe in free enterprise in a bigger number. They 
might think capitalism is something not quite as clean and pure as free 
enterprise, but we have got to believe in our market system.
  This free enterprise capitalistic system that we have in the United 
States of America is the engine that defeated the Soviet Union in the 
Cold War. For 45 years, we fought a Cold War, and we were playing chess 
and Monopoly on the same board. And the question was, will the Soviet 
Union checkmate the United States militarily with their ICBM missile 
endeavor before we bankrupt them economically? On that board, chess and 
Monopoly on the same board, this American free enterprise system 
defeated the Soviet Union and won the Cold War without technically 
firing a shot because our economy has been, and remains, the strongest 
in the world, the most robust in the world, the most resilient in the 
world and the most adaptable in the world because it rewards 
entrepreneurs better than any other in the world and because we have 
created a favorable tax arrangement and a favorable regulatory 
arrangement compared to, let's just say, European socialism.
  But our President, Madam Speaker, has drawn a different message. He 
has drawn a different message from the New Deal in the 1930s. The 
message that he has drawn is that the failed New Deal actually would 
have succeeded if FDR had not lost his nerve and spent a lot more 
money. And this President has not lost his nerve. He has spent a lot 
more money. He has spent so much money that I look for the vibrations 
and reverberations down there. I would just think that FDR would be 
rolling over in his grave right now watching the trillions of dollars 
that have unfolded.
  I have expressed this before that when we say ``trillions of 
dollars,'' these trillions are being discussed across America in the 
coffee shops as we used to talk about, well, let's just say millions, 
$1 million here, $1 million there, and pretty soon you have some real 
money. But trillions work out this way. I don't know how much corn they 
raise in Texas, but I can tell you how much we raise in Iowa. We will 
raise about 2\1/4\ billion bushels this year for 2009. And if it is 
worth a little better than 4 bucks, which it probably is not going to 
be in this economy, it is about $10 billion worth of corn. That is 
about what that crop is worth.
  Now, if all of our producers took all of their input costs and put 
all their labor, all their land prices away and they swallowed all that 
and just gave that corn crop at market prices to help pay down the 
deficit, let's just say to help pay down $1 trillion, they could take 
the 2009 crop, the 2010 crop, the 2011 crop, all the corn we raise, 
give it to the government to pay down $1 trillion, and when they paid 
down the $1 trillion in real present value, the 2108 crop, 100 years 
would be how long it takes to accumulate $1 trillion with all the corn 
that Iowa can raise, an entire century of corn for $1 trillion. And now 
we can think in these terms: dollars, corn.
  Put it in another term here, that is only $1 trillion. I said that 
into the Record, Madam Speaker. All the corn that Iowa can raise in 100 
years is only $1 trillion, and it is only compared to a $9.3 trillion 
deficit approved by this budget that was just passed out of here the 
other day, 9.3 trillion. Now, how long does it take to pay off $9.3 
trillion at present value? That would be--I have to round this a little 
bit so I can do the math in my head. That would be 1,000 years of all 
the corn that Iowa can raise with no expenses deducted from it, the 
gross value of that crop as it comes out of the field and will be 
delivered, 1,000 years of all the corn Iowa can raise just to offset 
the deficit created by the budget that was proposed by this White House 
and passed by this Congress.

                              {time}  2015

  And then if we thought we were going to pay off the national debt, 
that is another $11.5 trillion or $11.8 trillion, and you add that to 
the $9.3 trillion deficit, and these numbers I am looking at are $20.8 
trillion to $23 trillion depending on who you ask for that number. But 
let us say $20 trillion, the downside, that would be all of the corn at 
present value and at present yields that we could raise in Iowa for the 
next 2,000 years. Or if you want to back up, take it back to the birth 
of Christ. That is what it would take to pay off the national debt and 
pay off Obama's deficit by his budget. President Obama, I should say.
  On top of that, what we have, Madam Speaker, is the nationalization 
of great American companies. Great companies, companies that grew right 
out of the entrepreneurship of the can-do spirit of receiving a reward 
for value invested, invest some dollars and put some investors 
together, and put together some shareholders, crank out a company that 
is going to start making cars and sell to the market. And sometimes 
even go out and create the market, which Henry Ford did. Henry Ford 
actually created a market for him to sell to.
  You have heard the numbers from Judge Carter.
  Today, well, 50 percent of General Motors is owned by President 
Obama. And representing the United States of America, representing the 
disenfranchised taxpayers that will be paying off the debt and not 
receiving any return on this particular investment, 39 percent, you 
heard the number right, from the UAW, the union, own shares in the 
company. And what did they pay for those? Maybe they actually did, if 
the shares are down to a couple of cents, but I don't know those 
numbers. And the bondholders are reduced down to 10 percent, and the 
stockholders 1 percent.
  This is a nationalized company. Isn't anybody alarmed about this? 
Didn't anybody see the image down in Central America when we saw the 
glad-handing and the extra hand up there on the arm of Hugo Chavez, the 
happiness that showed the big, grinning faces that came from President 
Obama and Hugo Chavez, sending an image to the world that they are good 
buddies.
  I see two things when I see that image. One of them is Hugo Chavez, 
standing at the podium at the United Nations the day after President 
George W. Bush spoke to the United Nations and calling our President in 
Spanish the devil, El Diablo, and saying there is a stench that still 
lingered at the podium, to snickers of laughter from the people sitting 
in the United Nations funded by Americans.
  And what is the message that the world gets, glad-handing, big grins, 
President Obama, President Hugo Chavez? They get the message that there 
is no penalty for insulting the United States or declaring the United 
States to be your enemy. There is a reward for it. There is a happy 
image to send around the world.
  The second thing, the second message is the one that I get, and that 
is two leaders of their representative countries, one of them, the 
leader of the free world, standing side by side grinning at the 
cameras, each of them had nationalized at least one important company 
in their country within a 30-day period of time. And in President 
Obama's case, he way out did Hugo Chavez when it comes to the 
socialization of major corporations. He nationalized General Motors and 
he nationalized Chrysler all in the same day; and he stepped up and 
took credit for it.
  This free enterprise country, this country that forged freedom and 
settled a continent because we had entrepreneurs that could go out and 
struggle and receive on their investment for their labor and brains and 
for their intuitiveness, that is how we settled this country. And now 
we are to the point where we have the radical nationalization of major 
American companies, General Motors, Chrysler, on the same day. And you 
would think if a President thought that he needed to do that in order 
to save a company, that he would have at least been wise enough to keep 
his fingerprints off it, but he took credit for it. He took credit for 
it. He did the press conference. He did the nod. He did the smile.
  I am sitting there appalled that there could be such a thing taking 
place in this country, and with a disregard for what made this a great 
nation. And one of the central pillars of American exceptionalism is 
free enterprise capitalism, and you cannot deny that from a historical 
perspective. But he did that. And he said, I will work to protect your 
benefits, to the unions.
  And Nancy Pelosi, the formal Speaker of this House, said she is not 
going to give the automakers bargaining leverage over the unions. When

[[Page H5090]]

you see the unions are stepping in in ownership, I have to take you 
back to a Web site that everybody in America should visit, and it is 
the Democratic Socialists of America, DSA.org. And on that Web site, 
you can read some things.
  One says, ``We are not communists.'' Okay. Well, I need to understand 
that distinction. So I read that carefully. It says we are not 
communists because communists believe in the nationalization of 
everything. They think that they should own all of the properties and 
all of the companies and tell everybody what to do and what to make and 
what they are going to make. And socialists are not really like that. 
They recognize there is merit to have little mom-and-pop shops running 
around making donuts, probably not selling gas anymore, but running the 
barber shop and the flower boutique. So they say, we don't want to 
nationalize everything; we just think that the major corporations 
should be run for, get this, ``the benefit of the people affected by 
them.''
  What does that tell you? Running major corporations for the benefit 
of, which is it, the unions or the customers? It sure in the world is 
not the shareholders and the bondholders. But it is for the unions, the 
labor unions, the employees, one might say, or the customers.
  And so we have now national socialism in America. The 
nationalization, socialization of these major companies, 50 percent of 
General Motors to the Federal Government, deemed by the President, 39 
percent to the UAW, 10 percent to the bondholders, 1 percent to the 
stockholders. And watching this happen is a sad, sad tragedy that is 
not bringing the alarm in this country that I think it ought to bring.
  I am greatly disturbed by what I see, and these are not speculations; 
these are the facts. These are after-the-fact facts that are there. 
History can't write it any other way unless somehow they wake up 
tomorrow morning and decide they are going to start selling shares off 
to some private interest so that the stockholders can start to run the 
company again, and maybe they can decide whether they want to fire the 
CEO rather than the President of the United States. And the President 
of the United States has also decided what people can collect for a 
salary and what they can't.
  And they have put money into the banks, and some of the banks are 
resisting it. They want to give the money back. The President doesn't 
want to take the money back. He doesn't want to denationalize the 
nationalized banks.
  That sounds like I might be impugning his motives. And I tell you, I 
look at the facts. Here is how I draw this conclusion, Madam Speaker. 
This is the 12 of 14 rule. With the mortgage-backed securities, the 
toxic mortgage debt that is out there, the proposal that came out about 
3 or so weeks ago, it was on a Monday, we get these proposals on a 
Monday. Work on them all weekend long, Monday morning you get a new 
idea, and another new idea, and it comes at you over and over again 
like a cannon going off every Monday morning, sending shock waves 
through our economy.

  But this rule, 12 of 14 rule works out to be like this: If an 
investor will partner with the President in picking up this toxic debt 
on these mortgage-backed securities, a regular investor, like Judge 
Carter, for example, could lay $1 down on the table and then the 
Federal Government will match it with one of your tax dollars. So there 
are $2 on the table. And then there are loan guarantees that are 
guaranteed for the balance. And this is a $14 package, $12 worth of 
loan guarantees, guaranteed by President Obama, your tax dollars. So 
there is $12 worth of skin on the table from the taxpayers that are 
loan guarantees. There is another dollar on the table from the taxpayer 
that is matching the $1 that Judge Carter introduced for his 
investment. The individual has a 7 percent investment, and the 
taxpayers will have a 93 percent investment. And so how do you think 
you might split some kind of an investment like that?
  I would think, okay, I will give you 7 percent of the profits for 
your 7 percent of the investment. But President Obama says no, no, no. 
I want you to have half of the profit, Judge. You can take half the 
profit for your 7 percent investment, and the Federal Government, the 
taxpayers, will take 93 percent of the risk and even that wasn't good 
enough. Then the President says, why would we want to tax the people 
who are our partners? So now they don't want to tax 50 percent of the 
profit that you get for 7 percent of your investment, they want to 
waive the tax on that.
  Now, if we were in desperate condition and we needed to figure out 
something to do with these toxic debts and mortgage-backed securities, 
maybe that would be an act of desperation where you put together a 
package like that, and you can say, I am partnering with the private 
sector. This really isn't the nationalization of the mortgage industry; 
I really didn't follow along on what we did to Fannie Mae and Freddie 
Mac. No, this is a free enterprise endeavor.
  Well, it doesn't work out this way. Some of us, and I introduced 
legislation to do this, would suspend the capital gains tax on those 
investments that pick up the toxic debt. But we couldn't suspend those. 
That idea was off the table in a heartbeat. The chairman of the 
Financial Services Committee swept those things off the table 
immediately. So we couldn't give a tax break to willing investors, but 
we would give a tax break if you partner with the Federal Government. 
We can't suspend income tax on the profits made by most who pick up 
mortgage-backed securities because that would be, what, free enterprise 
capitalism that had a favorable tax situation that could come in and 
rescue this situation with willing investors.
  That confirms for me that this President is determined to 
nationalize, nationalize, nationalize until we become nationally 
socialized big business in America, exactly verbatim within the model 
plan that is on the Democratic Socialists of America Web site, dsa.org, 
where it says we just want to nationalize the big companies and run 
them for the benefit of the unions and the benefit of perhaps the 
customers, but not for the benefit of the shareholders.
  That is the scenario today. I thank the gentleman for yielding, and 
appreciate him leading this Special Order.
  Mr. CARTER. I thank the gentleman. I want to point out a couple of 
things so we don't get off into this magic world that has been created 
by our Democrat friends and the media, that stockholders are some sort 
of exotic, wealthy billionaires that own all of these companies.
  The teachers retirement system of Texas probably owns General Motors 
stock. I don't know, I haven't looked into it. But back when General 
Motors was $60 or $70 a share and everybody was proud to be an 
American, I am sure that pension funds for our teachers around this 
country invested. So those people would be looking at a 2-cent value or 
a 3-cent value or a nickel value for stock that they paid $60 or $70 a 
share for. So don't get into this magic myth that is created by those 
who would like to socialize this country that we are talking about fat 
cats. We are not talking about fat cats. We are talking about the 
ladies down at the Catholic church that got together and decided they 
would have an investment club. And they all put a little bit of their 
egg and butter money, as my grandmother used to say, in a little pot 
and said, now let's sit around and study the stock page in the 
newspaper and let's buy ourselves some stock.
  A lot of them made a whole lot of money and lost a whole lot of money 
during the dot-com boom of the 1990s. But those were not fat cat 
investors. Those were little old ladies at the Catholic church, okay, 
or at the Methodist church or at the Baptist church or the bridge club 
or whatever. They are your neighbors. They are the people who live next 
door to you. They are the people your children go to school with, their 
parents; and even the kids' college funds are invested in things like 
General Motors and Chrysler.
  So when we nationalize these industries, when we take it out of the 
hands of the people who own it, which is the stockholders, and we don't 
give them, defend their rights as stockholders, we make a deal through 
the pressure of the White House.

                              {time}  2030

  You know, interesting statement, this is one of the lawyers talking 
about what happened to the bondholders in

[[Page H5091]]

the Chrysler deals. He said, ``One of my clients was directly 
threatened by the White House and in essence compelled to withdraw his 
opposition to the deal under threat that the full force of the White 
House press corps would destroy his reputation if he continued to 
fight. That was Perella Weinberg,'' Tom Lauria, the head of the 
bankruptcy department for the top New York City law firm of White & 
Case, told a WJR 760 radio host.
  He goes on to say down here, ``Some of the critics charged that the 
administration used leverage to provide TARP funds to force banks to 
comply with this deal. In other words, investors like JPMorgan Chase, 
who also were bondholders in this Chrysler deal--the old TARP fund deal 
that we've been talking about now for months--was all of a sudden the 
twist to make them get in line. And what happened was this group that 
Mr. Perella Weinberg was involved in, they didn't take any TARP funds, 
so they didn't have the twist. And they stood up. And what did they do? 
They threatened them with the White House press corps. I'm sorry, when 
I was a kid, this doesn't sound like the America that we grew up with. 
This sounds like the people we used to fight. This sounds like Joe 
Stalin and some of those people that threatened their way to power.
  I am telling you, we ought to be worried about this. And I am deeply 
worried--although I am happy to see that this New York law firm is 
involved. I would hope that good litigants--because I believe in the 
justice system--would use the justice system to protect the rights of 
these creditors. I would hope they would do that.
  I would hope that we would realize that neither this Congress nor the 
Constitution of the United States has given the White House or the 
President of the United States the kind of power and authority that he 
is executing and utilizing on these two car companies. And then we find 
out that we've got some folks that--they have already said that they 
would take common stock in the banks, so they want to be stockholders 
when it comes to the banks. They want to vote that stock and control 
those banks. They want to take majority interest in our large banks. 
That is another nationalization of an industry.
  And so some of the banks said, you know what? We see the handwriting 
on the wall. We see that freight train coming down the track right at 
us. Here's your money back. We don't want your TARP money, take it 
back. And they are refusing to take the money back and threatening to 
charge massive penalties if the banks return the money that the 
American taxpayers provided to bail out banks in this TARP program. If 
they don't need the money and they want to give it back, what in the 
world is wrong with that? Except you no longer control the bank when 
they give the money back. You no longer can control the deals that are 
made with Chrysler by twisting the arms of the banks. You no longer can 
control American industry. And that is the kind of thing that these 
trillions of dollars that we're spending, we, as Americans, should be 
deathly afraid of, that there are people who would control our Nation 
with the money that we give them out of our pocket and we permit them 
to borrow in our name that we are going to have to pay back.
  I remember what I told my children as soon as they could understand 
English: the United States Government, nor any other government, never 
made a dime; they took it from you.
  Mr. KING of Iowa. Will the gentleman yield?
  Mr. CARTER. I yield.
  Mr. KING of Iowa. I thank the gentleman from Texas.
  It just brings to me a number that was reported in the aggregate, the 
union contributions, political contributions for the last election 
cycle, 45 billion dollars. And now we see a President and a Speaker of 
the House, and others, who have decided that they are going to make 
sure that there are shares in the hands of the workers without a 
transfer of wealth? But just simply--apparently they are good workers, 
all right. They think they are good campaign workers, that's what I 
hear.
  This question now troubles me, as I listened to the gentleman discuss 
this, with the teachers' salary, Teachers Union salary, and perhaps as 
invested in General Motors and Chrysler. And a big part of that 
portfolio perhaps is spiraling downward--has spiraled downward. Now, if 
you take the position that the President has, ``I will protect your 
benefits,'' and the position that the Speaker is taking, ``I am not 
going to let the automakers get bargaining leverage over the unions,'' 
and if that turns it into, Here are some stock shares, and the union 
can have controlling interest in the company--or at least to break 
even, half the interest--and broker it, if they can get together with 
the stockholders that have 51 percent, if that can be the case, this is 
a Federal Government bailout of a situation where they are setting up 
jobs for people, not jobs for production for profit. But if that 
happens--and it has happened--and the taxpayers are there, what happens 
if the retirement funds for the Teachers Union meet the same end as the 
value of the stock shares for General Motors and Chrysler? How do you 
go in and nationalize a retirement fund for a union? I think you don't, 
except to put the capital in there and just say we are going to 
guarantee it, just like we will with Social Security or any other 
entitlement.
  By great, huge gulps, this government is swallowing up the private 
interests, large corporations swallowing up one after another after 
another and nationalizing them and taking on obligations in the process 
that are implicit, that go on down the line. If you remember Fannie Mae 
and Freddie Mac, they didn't have a guarantee from the Federal 
Government. They just had the implicit full faith and credit of the 
Federal Government. And we came through, $100 billion here, $100 
billion there, $5.5 trillion in contingent liabilities. This can happen 
with these retirement funds, too. And when they get nationalized, 
pretty soon everything is government except the barber and the 
shopkeeper and the little ones. And it is right off the Web page, 
dsa.org.
  Mr. CARTER. And then we have national socialism, which is something 
we should fear.
  Mr. KING of Iowa. We would have national socialism.
  Mr. CARTER. Something that we have fought against a lot of time.
  I think we are about to wrap this up. I want to thank my friend for 
coming in here tonight. I want to thank the Speaker for her patience. 
We are raising questions that we think everybody and Members of this 
House should be asking each other and should be asking on the floor of 
this House and in committee and around this town. We didn't sign on to 
get on the slippery slope to socialism, and it is time for us all to 
stand up and say so.

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