Posted on Fri, Dec. 05, 2008
last updated: December 08, 2008 01:56:00 PM
WASHINGTON — Detroit's Big Three auto executives pressed their case for $34 billion in federal aid to the House of Representatives on Friday, but found the same kind of lukewarm, often discouraging reception they'd gotten a day earlier from the Senate.
House Financial Services Committee Chairman Barney Frank, D-Mass., painted a dire picture of the U.S. economy to illustrate why the carmakers need urgent help.
"For us to do nothing, to allow bankruptcies and failures in one or three of these companies in the midst of the worst credit crisis, and the worst unemployment situation that we've had in 70 years, would be a disaster," he said.
The Labor Department reported Friday that the nation's November job losses were the worst one-month decline in 34 years.
But, Frank added, "there is a concern that substantial reorganization (of the car companies) is needed," and it was unclear if committee members were convinced they saw that kind of detail in the restructuring plans presented by the Big Three executives.
The plans seem "still tentative and not final," said Rep. Paul Kanjorski, D-Pa., who represents a blue-collar area of northeastern Pennsylvania.
Rep. Maxine Waters, D-Calif., wanted to see more detail about the plans' impact on car dealers, whose numbers would shrink under them. What, she asked, about "the economies they support?"
Democrats, who have led the fight to help the carmakers, saw another problem: Convincing constituents still angry about the $700 billion financial rescue plan approved in October.
"We are faced with dealing with that anger and frustration and you're the people in front of us right now," said Rep. Gary Ackerman, D-N.Y.
The executives offered the same testimony they had given the Senate Banking Committee on Thursday. One crucial bloc, Northeastern and Midwestern Republicans, were wary of what they were hearing.
"Do we know what we're doing?" asked Rep. Peter King, R-N.Y. "Do we know what it's going to achieve?"
King said he could support the aid if "I was reasonably convinced the money is going to work."
But Rep. Donald Manzullo, R-Ill., raised a question that was on many lawmakers' minds: Will any of this aid put consumers back in auto showrooms?
"We need to give Americans incentives to buy cars again," he said, "and that's not in any of the plans."
There was also concern about whether $34 billion would be all the aid the carmakers would need. Last month, they sought $25 billion, and economist Mark Zandi is estimating they will need $75 billion to $125 billion to stave off bankruptcy. GM and Chrysler face bankruptcy without federal help, perhaps by the end of the year.
"It's going to get more expensive," Ackerman said to the executives.
Chrysler is seeking a $7 billion loan, while General Motors wants as much as $18 billion, including $4 billion immediately. Ford wants $9 billion.
Making the case Friday were Rick Wagoner, GM chairman and chief executive officer; Alan Mulally, Ford Motor Co. president and chief executive and Robert Nardelli, Chrysler LLC chairman and chief executive.
McClatchy Newspapers 2008