Dodd Endorses Financial Assistance For Automakers
WASHINGTON - Opening a hearing this morning on a potential cash-infused rescue of the U.S. automobile industry, Sen. Chris Dodd, chairman of the Senate banking committee, argued in favor of doing something to help -- though he said an auto bailout shouldn't carry the same kind of failures he's already seen in the rescue of the U.S. financial industry.
In discussing the more-than-$30 billion now being requested by the car makers, Dodd compared these potential loans with the hundreds of billions already committed to the big-name financial companies in the Bush Administration's intercession to stave off a U.S. credit collapse. "Indeed," Dodd said, "in the spirit of the season, [U.S. Treasury] Sec. [Henry] Paulson has given the nation's largest financial institutions the biggest holiday present in the history of American capitalism."
Dodd said, "There ought to be a way to come up with a far smaller dollar figure to protect this economy from the unintended consequences that would be unleashed by a collapse of the automobile industry."
But Sen. Richard Shelby, the ranking Republican on the banking committee, opposed the idea -- just as he had for the financial-industry help, which has since seen "erratic implementation" and "questionable efficacy." He argued that if taxpayer money is given to Ford, General Motors and Chrysler, "I personally doubt that would ever be paid back."
The CEOs had already asked for $25 billion in recent weeks, but congressional leaders admonished them for not having a specific plan for how that money would be used to keep their companies going. And the public -- which hasn't generally supported these government bailouts -- was treated to the sight of the business leaders arriving in Washington on expensive corporate jets. This week, the leaders drove to Capitol Hill.
As they asked for loans in the billions, the CEOs described some of the things they hope to do differently in the future -- mentioning cost cutting, brand reductions and new pushes toward fuel-efficient vehicles.
Jim Fleming, president of the Connecticut Automotive Retailers Association whose members employ about 14,000 in the state, was also invited to today's hearing, with Dodd introducing him as "a good friend of mine." He testified that if the manufacturers aren't kept out of bankruptcy, the dealerships will go under. Fleming said, "People will not buy cars from a bankrupt entity." He added, "If you say yes to this financing package, it gives us some time to try to adjust to what's going on in the economy."
Even if much of Congress supports this bailout idea, getting legislation done isn't a foregone conclusion at this time-squeezed end of the session. Dodd said, "If Congress is going to act, it's going to require some significant effort over the coming days."
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