[Congressional Record (Bound Edition), Volume 154 (2008), Part 18]
[Senate]
[Pages 24481-24482]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            MORNING BUSINESS

  Mr. REID. Mr. President, I ask unanimous consent that the Senate now 
proceed to a period of morning business, with Senators allowed to speak 
therein for up to 10 minutes each, and that the morning hour expire at 
4:30 p.m.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. CARPER. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Sanders). Without objection, it is so 
ordered.
  Mr. CARPER. Mr. President, I want to take the next several minutes, 
as we are getting together back in the Capitol, to discuss the possible 
future assistance the Federal Government might provide to our auto 
industry.
  Coming down on the train, several people said to me--some for and 
some against the proposal--that they were not comfortable with the idea 
of giving money to the auto industry, and I said neither am I. I am not 
interested in giving money to the auto industry any more than I wanted 
to give money to the financial services industry.
  I invite the people who are following this issue to go back in time 
to 1979, 1980, when Chrysler was going through a difficult time, and 
Lee Iacocca was the CEO of the company then. He called for Federal 
assistance. I think at the time they were interested in a Federal loan 
to Chrysler. We weren't interested in doing that then, but we agreed to 
provide loan guarantees so that if Chrysler could find financing 
elsewhere, the Federal Government would provide a backstop in the form 
of a guarantee of the loans; otherwise, Chrysler would not have been 
able to obtain the needed financing. We called on Chrysler to make some 
difficult decisions to reduce costs and make sure that in the long haul 
they would be successful and viable as a company.
  At the time, Lee Iacocca told us: If we could make that Chrysler K 
Car, that is our ticket to salvation and redemption and profitability. 
He said we don't have the financial wherewithal to get there. The 
Federal Government agreed to provide a lifeline in the form of a loan 
guarantee. A number of States, including my State of Delaware, agreed 
to provide loans--direct loans in this case--to Chrysler. We negotiated 
a collateralized loan to Chrysler in 1980. In return for the Federal 
taxpayers taking on the risk in 1980 of the loan guarantees, we asked 
for an ability to participate in an upside. We wanted to make sure not 
just the shareholders and employees would benefit but that the 
taxpayers would benefit. We agreed to make loan guarantees in return 
for getting warrants--not warrants for anybody's arrest but a warrant 
that is a financial instrument that can be used to turn into stock and 
provide the potential, at least, for the Federal taxpayer to make some 
positive return on this investment.
  As it turned out, when the deal was closed and Jimmy Carter signed 
the legislation in the early part of 1980, the stock for Chrysler was 
about $5 a share. Under the terms of the agreement, the Federal 
Government was able to purchase Chrysler stock for $13 a share. It 
didn't sound like a very good deal at the time. Nonetheless, we had 
that option to buy Chrysler stock at a future date at $13 a share. 
Later, Chrysler built the K Car and returned to profitability. They 
made money and the value of the shares appreciated. The time came when 
the Federal Government decided to go to Chrysler and say we would like 
to use our warrants and buy the stock at $13 a share. Then we turned 
around and sold them for $30 a share after that. The difference between 
the $13 and the $30 we sold them for led to an appreciation or 
accumulation of about $310 million for taxpayers. The loan the State of 
Delaware made to Chrysler--the collateralized loan I negotiated as 
State treasurer--was paid in full. Not only did we get the principal 
back, but we made interest for the taxpayers of my State. The same 
thing occurred to the taxpayers of other States. Meanwhile, Chrysler 
agreed to make a number of concessions that there be a sharing of 
sacrifices made by labor and management and others to help make that 
company viable for the longer haul. Lee Iacocca worked for $1 a year.
  The long and short of it is that it worked. That was in 1980. It 
worked for over a quarter century. Chrysler has gotten themselves into 
trouble because they began relying more and more on large inefficient 
vehicles--SUVs, trucks, and relatively few fuel-efficient cars or fuel-
efficient light trucks or SUVs. In the end, by this time last year, 
roughly 70 percent of what Chrysler was building was energy-inefficient 
cars. During the CAFE increases last year, among the companies that 
pushed back initially was Chrysler. They have had to begin pivoting, if 
you will, to move from a product line where up to 70 percent of the 
vehicles were light trucks and SUVs, relatively few cars, and not many 
very fuel efficient, to one where not just the light trucks and vans 
and SUVs were energy efficient but also the cars. You cannot do that. 
Chrysler cannot do it, and Ford and GM cannot move within a year, or 
even 2 years, from a product line that is woefully inefficient in terms 
of fuel economy to one that is highly efficient. It has taken a period 
of time.
  I am encouraged by the progress they are making at Chrysler. They are 
a couple of years out from being where they need to be, given the 
marketplace and what consumers are asking for.
  Meanwhile, over at Ford, about 2 years ago, they largely redefined 
the company, including the logo, to begin a major transformation. Under 
the leadership of Bill Ford and Alan Mullaley, former head of Boeing, 
who was brought in to run Ford a couple years ago, they began a 
transformation not 12 months ago but more like 2 years ago to move to 
vehicles such as the Focus and Fusion. They are in a better position 
now as people are buying fewer vehicles and are looking for energy-
efficient vehicles. There is some neat, nifty technology and items for 
the vehicles as well, with the partnership they have worked out with 
Microsoft.
  Over at GM, meanwhile, GM is hopefully about to introduce, in a year 
or year and a half, what I call the most advertised car that has never 
been built, the Chevrolet Volt. I saw it unveiled at the Detroit Auto 
Show about a year and a half ago--a plug-in hybrid, flex fuel vehicle 
with the potential of getting not just 40 miles out from the garage in 
the homes in the morning, but a potential for getting 80 to even 90 
miles per gallon by using an alternative onboard fuel system, a 
propulsion system, not to propel the car but to recharge the battery. 
Unfortunately, we have not built the battery yet. Nobody has built a 
battery yet that can do that or designed one that will work at minus 10 
degrees Fahrenheit or 110 degrees Fahrenheit. They have worked for 10 
years under all kinds of conditions. Efforts are underway in many

[[Page 24482]]

countries to win a race to build that battery. The Federal Government 
has provided a fair amount of financial support, investing in 
technology to make sure we get to the finish line ahead of our foreign 
competitors. It is an important race. GM, I think, stands to benefit 
from this, and so do the folks who work there and those who have shares 
with GM. So do the rest of us, frankly.
  Let me come back to what I said earlier, about the conversation I had 
with several people on the train coming from Wilmington today. They 
said to me: We didn't like the fact that you gave all that money to the 
banks, and we don't like the idea of giving all that money to the auto 
industry. If you look at what we have done with the financial 
institutions, we have, under the legislation, created a so-called TARP. 
Under that legislation we authorize the Treasury to invest in the 
banks, to take an equity position. With the moneys we have infused or 
invested into most of these banks, we bought preferred stock. That 
preferred stock pays initially 5 percent per year, and later 9 percent 
if it is not bought back by the banks. In addition, we get options, 
much as we did with Chrysler in 1980, that could be converted into 
shares of stock that we can benefit from--not just we but the taxpayers 
can benefit from.
  The idea there was to make the investment with the possibility that 
if there is an upside or rebound by the financial institutions that 
asked for this investment, the taxpayers have the opportunity to 
participate in the profits, as we did with respect to Chrysler all 
those years ago. The money that we are now talking about, or will be 
debating, whether to make available for working capital for the auto 
companies--let me add that only Chrysler and GM have indicated an 
interest in drawing down this money. Ford said: We think we are OK. 
Maybe later we will need a line of credit. For now, we think we are all 
right.
  That is good news. So what we are working on is an approach where we, 
just as we invested in the financial institutions in order to get back 
preferred stock that pays 5 to 9 percent and also carries the 
possibility of warrants that we can turn into profit-making stock 
shares later, we want to do the same thing with our auto industry.
  The Presiding Officer will recall a year or so ago when we passed 
CAFE legislation. In it we passed section 136, which said we want to 
provide as much as $25 billion so that the auto companies can modernize 
their plants for the principal purpose of building more energy-
efficient vehicles. We feel that is what is needed--high quality and 
good productivity. But that is one of the major things needed to be 
competitive in the world today: energy-efficient cars, trucks, vans, 
and so forth.
  That $25 billion is not going to be available, apparently, right away 
to go into plant modernization.
  The idea is to take as much as $15 billion of that $25 billion to 
make available to Chrysler and General Motors. The idea is not to give 
them this money; the idea is to invest this money in ways they can use 
it for working capital to get them through the next several months and, 
in the meantime, to require, under the guidance of what has been called 
a czar or an oversight board whose job would be to act almost as a 
bankruptcy judge, to make sure that further savings are realized by 
both Chrysler and GM but to ensure there is some further givebacks not 
just from labor, not just from management, not just from bondholders, 
not just from dealers, and not just from lenders but all the above. It 
is a concept that makes sense. The idea of here is $15 billion, and we 
hope you can get better and repay the money down the line, is not what 
we are interested in doing.
  We want to improve the likelihood that we will get back every dime we 
lend of this $15 billion and more, if needed, later on. But we want to 
make sure the companies, particularly Chrysler, Ford, and GM, make the 
additional changes they need to increase the likelihood that they will 
be viable for a long period of time.
  I close by saying we are seeing a real transformation in our economy. 
We used to be a big manufacturing country. We are less so today. Some 
people say that is fine, we will be a service economy, we will provide 
financial services and legal services, we will have insurance 
companies, maybe we will grow some food to feed ourselves and some of 
the rest of the world. But at the end of the day, we still need to make 
things. We still need to make things that people here and around the 
world want to buy.
  One of the things I believe we need to make are cars, trucks, and 
vans. It has been that way for a long time. It needs to continue to be 
that way going forward.
  I have had the privilege of representing and working for the people 
of Delaware, gosh, since 1976, when they elected me their State 
treasurer. We have had two auto assembly plants in my State for 50, 60 
years--a Chrysler plant and a GM plant. The Chrysler plant is going to 
close at the end of this month. It is painful to me, and I know all the 
people who work there, the retirees, all who bought their vehicles and 
supported the plants in ways large and small over the years. But the 
writing is on the wall. My fear is that is going to happen.
  As this happens and we see plants such as our plant in Newark, DE, 
the Chrysler plant, close, it is important we also remember the people 
who are losing their jobs there, the folks who have not enough 
experience, enough time to retire and be eligible for benefits. As they 
prepare to close the doors at the Chrysler plant in Newark, DE, I wish 
to make sure the folks who are losing their livelihood have the 
opportunity to be trained for other jobs in my State or other States 
that will enable them to be gainfully employed, to make a decent income 
for themselves and to support their families.
  One of the things we can do, in addition to providing, if you will, a 
loan guarantee or direct loan with strong conditions to these auto 
companies, is remember our responsibilities to those who are left 
behind and those left behind without the prospect of ever working again 
in the auto industry.
  There are some countries around the world--Finland comes to mind, 
Denmark, and a couple others--that do a good job. As industries grow 
up, mature, the nature of the job market, the industries in those 
countries change. Some countries around the world do a very good job of 
helping people whose skills for building, whether it is cars or buggies 
or buggy whips, are no longer appropriate--retraining people, 
supporting them for a period of time, giving them the social support 
net they need but then training them for jobs that need to be done, in 
this case, in the 21st century.
  There you have it, some thoughts. My hope is we will come back and 
have a robust debate for the remainder of this week, and before this 
week is over we will vote not to give away $15 billion to Chrysler or 
to GM but that we will vote to be willing, as we did in 1980, to make 
an investment that has a potential upside, not just for the people who 
work in the companies, not just for the people who own shares of those 
companies but also for the American taxpayers. If we do take on this 
risk, there needs to be a reward for the taxpayers whose money is at 
risk.
  Mr. President, thank you for this opportunity. I suggest the absence 
of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. DURBIN. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mrs. McCaskill). Without objection, it is so 
ordered.

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