November 17, 2008 CONGRESSIONAL RECORD — SENATE S10539 

Mr. SPECTER. 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the quorum call be rescinded.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. 

f 

ECONOMIC AID TO THE 

AUTOMOBILE INDUSTRY 

Mr. SPECTER. Mr. President, I have 

sought recognition to comment on two 

issues relating to our current economic 

problems which are so widespread in 

our country. One is the proposed economic aid to the automobile manufacturers and the second is the proposed 

assistance to people who are threatened with foreclosure. 

The suggestion has been made that 

there should be very substantial Federal economic aid to the automobile 

manufacturers, focusing at the moment on General Motors. I am prepared 

to consider that issue providing we 

have a factual and evidentiary basis 

which would warrant such economic 

aid, with an analysis of the current financial situation of General Motors, 

with an analysis of what the proposals 

are to assist General Motors in a way 

which would be realistically calculated 

to keep General Motors in operation, 

and with an evidentiary base to show 

that there is not some preferable alternative with respect to letting the market take its course. 

It seems to me indispensable that if 

Congress is to undertake that kind of 

analysis that there is going to have to 

be regular order followed as to how we 

legislate in this body. And that was not 

done on the recent $700 billion proposal 

which was passed by the Congress last 

month. Our regular order requires that 

there be a legislative proposal, a bill 

written down which can be read, studied, and analyzed. After there is a bill, 

to have hearings with the appropriate 

committee and to hear proponents of 

the plan and to hear opponents of the 

plan and then to have in regular order 

a committee markup where the members of the committee sit down—in this 

case the Banking Committee, which 

has jurisdiction—look over the bill and 

then mark it up—that is goes over the 

bill line by line. Then a report is written. The report comes to the full membership, the Senate has debate, amendments may be offered, and then the 

Senate works its will on passing a bill, 

if the Senate chooses to do so. 

A similar proceeding occurs in the 

House of Representatives, and then 

there is a conference with Members of 

the two bodies coming together for a 

presentation to the President, who 

then has ideas maybe involved in the 

legislative process, and he signs or vetoes. 

Regrettably, that was not done during the passage of the $700 billion economic aid proposal, and it was not 

done, I submit, much to the disadvantage of the country. When this issue 

was under consideration, I wrote to the 

majority leader and the Republican 

leader by a letter dated September 21 

urging that we not rush to judgment; 

saying that we ought to follow regular 

order in the way we handle this matter. 

Mr. President, I ask unanimous consent to have inserted in the RECORD a 

copy of this letter following my remarks. 

The ACTING PRESIDENT pro tempore. Without objection, it is so ordered. 

(See exhibit 1.) 

Mr. SPECTER. On September 23, I 

wrote to Secretary of the Treasury 

Paulson and the Chairman of the Federal Reserve Ben Bernanke raising 

quite a number of issues looking to 

what the merits of the proposal were. 

On September 27, I wrote again to Secretary Paulson, Chairman Bernanke, 

also again to the leaders of the House 

and Senate, and also to the key members of the committee raising a series 

of questions. I have yet to receive an 

answer to any of these letters. 

On September 29, I was informed that 

we would have a session after the 

House of Representatives defeated the 

proposal, which was a surprise; that 

there would be a session on Wednesday, 

October 1, at 7:30 in the evening, and 

the Senate was then confronted with a 

proposition to either take it or leave 

it. No amendments could be offered. By 

this time, the original proposal had expanded from 4 pages, which Secretary 

Paulson had initially submitted, and it 

had expanded to more than 100 pages, 

then to more than 400 pages. It was unknown generally that there was a good 

bit in the legislative proposal of what 

we refer to as grants or pork, which 

turned out to be very, very embarrassing. But faced with that kind of an 

emergency situation, my vote was cast 

in the affirmative. 

The vote was 474 to 25, a very heavy 

margin in support of the legislation, 

and it was a rush to judgment, without 

following regular order and without 

considering so many of the critical 

issues which should have been taken up 

in the regular course of Senate business. 

I traveled my State during the course 

of the month of October, as it is my 

custom to touch each of Pennsylvania’s 67 counties each year, and the 

number one item on the agenda was 

the $700 billion economic aid program. 

And candidly, the temperature of my 

constituents was boiling—212 degrees 

Fahrenheit—and the thermometer was 

broken. I see the distinguished Senator 

from Maryland, Senator MIKULSKI, 

nodding in the affirmative that that 

was the situation in her State as well. 

Now we are asked to have economic aid 

for General Motors. There has been a 

figure of some $25 billion which is 

talked about. I am prepared to consider 

that, but only if there is an understanding of what are the facts, what is 

the evidence; is there a factual and evidentiary base for Congress to do this? 

I am told informally that it takes $11 

to $14 billion in cash to operate General Motors. 

But they now have $16.2 billion. They 

have $50 billion in bonds that are perhaps worth in the range of $20 billion 

or a little more in the market that 

yield 9 percent in interest. On the market value, that would put their borrowing somewhere over 20 percent. The 

question comes to my mind: Isn’t that 

expensive? Couldn’t that be modified? 

But I have yet to see any semblance of 

a plan for General Motors to become 

viable. What are the prospects? 

General Motors and the automobile 

industry generally—the industry has 

been on notice for a long time that 

they were in a very difficult competitive situation; that the standards on 

gas mileage were about to be imposed 

and were imposed in legislation last 

year. What have they done? 

We have been told it is not advisable 

to consider chapter 11 proceedings 

under bankruptcy. But we know that 

Continental and U.S. Air have gone 

through that. 

We are told that the warranties 

would not be sustainable and that people would lose confidence. There may 

be ways to address that kind of issue 

with a fund set up for warranties to be 

funded. 

All of these are questions which, it 

seems to me, need to be answered. 

When we were informed through a variety of sources that we would be in a 

lame duck session starting today, there 

was a projection for a Senate vote on 

Wednesday. I wrote to Senator REID

and Senator MCCONNELL, a letter very 

similar to the one I wrote on September 21, urging that we not rush to 

judgment and asking that there be consideration of a great many of these 

issues if we were to make some sensible 

determination as to financial aid to the 

automobile industry. I sent copies of 

this letter, again, to Treasury Secretary Paulson and to Federal Reserve 

Chairman Bernanke, and also to the 

chief executive officers of General Motors, Ford, and Chrysler. 

I ask unanimous consent that copies 

of these letters be printed in the 

RECORD. 

There being no objection, the material was ordered to be printed in the 

RECORD, as follows: 

U.S. SENATE, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC, September 23, 2008. 

HENRY M. PAULSON, Jr., 

Secretary of the Treasury, Department of the 

Treasury, Washington, DC. 

BEN S. BERNANKE, 

Chairman of the Board of Governors, Federal 

Reserve System, Washington, DC. 

DEAR SECRETARY PAULSON AND CHAIRMAN

BERNANKE: I write to you because I am in the 

process of deciding how to vote on legislation to deal with the economic crisis. I agree 

that there is need for federal action; but I 

am concerned that we not rush to judgment 

without giving sufficient attention to the 

many complex issues which are involved. 

At the outset, the, or a, precipitating 

cause was the fact that hundreds of thousands of people, perhaps as many as five million, faced an inability to make their mortgage payments and eviction from their 

homes. These mortgages were ‘‘securitized,’’ 

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S10540 CONGRESSIONAL RECORD — SENATE November 17, 2008 

divided up and sold in packages to many people or entities. As a result, it was not always 

clear who had the authority to adjust these 

mortgages, and when it was clear, adjustments were not made quickly enough. Last 

November, Senator Durbin introduced S. 2136 

and I introduced S. 2133 to give the bankruptcy courts authority to revise homeowners’ financial obligations. Keeping people 

in their homes should be a, if not the, fundamental object of congressional action. 

After assisting homeowners, a decision 

should then be made as to what additional 

federal aid is necessary to unclog the lending 

pipelines and restore confidence and stabilize 

the economy. I am very skeptical about 

granting authority to spend $700 billion on 

other aid without standards as to who should 

get the funds and a requirement that there 

be demonstrated necessity that such additional expenditures are indispensable to stabilizing the economy. 

Then there is the question of oversight and 

regulation. Obviously, there must be oversight and some regulation to prevent a recurrence. As I see it, the regulation must be 

calibrated to those objectives and not go too 

far. Vigorous enforcement of our laws to prevent market manipulation, as well as added 

transparency, should be a priority. 

I hear tremendous resentment from my 

constituents on this matter. In a free enterprise society, entrepreneurs may undertake 

whatever risks they choose to secure big 

profits, but when there are losses, they 

should not turn to the government for a bailout which puts the burden on the taxpayers. 

The firms/corporations and their executives 

who created the crisis should not profit from 

a federal bailout. If it is not already a part 

of your proposal, you should consider structuring the funding in a way that gives the 

Government a preferred creditor position 

and a share in ultimate profits, rather than 

simply buying up debt which has declined in 

value. And any aid should be conditioned on 

the elimination of golden parachutes or 

large compensation packages. 

Also, I am concerned about reports that 

foreign corporations, with a United States 

affiliate, will participate in a federal bailout. 

If foreign corporations are to get funding, 

then foreign governments ought to bear 

their fair share. 

I know there is concern that Congress 

must act promptly or the economy may deteriorate further. It seems to me that Wall 

Street should and would understand that legislation on this complex matter requires 

some time. If it is seen that Congress is moving as swiftly as practicable, that ought to 

stem the tide. But we can only do it as fast 

as realistic to work through the legislative 

proposals and resolve these intricate issues. 

These are issues which come to my mind at 

the moment and I am sure there will be more 

as the hearings progress and the debate occurs. I would appreciate your responses as 

promptly as possible. 

Sincerely, 

ARLEN SPECTER. 

U.S. SENATE, 

Washington, DC, November, 14, 2008. 

Hon. HENRY PAULSON, 

Secretary of the Treasury, Washington, DC. 

Hon. BEN BERNANKE, 

Chairman, Federal Reserve Board. 

GENTLEMEN: With this letter, I am enclosing a copy of a letter which I am sending 

today to Senate Majority Leader Harry Reid 

and Republican Leader Mitch McConnell. 

I would appreciate your views on the issues 

which I have raised in that letter. By letter 

dated September 23, 2008, I wrote to the two 

of you asking questions about the September 

bailout proposal and have never received an 

answer. 

Sincerely, 

ARLEN SPECTER. 

U.S. SENATE, 

Washington, DC, November 14, 2008. 

Hon. HARRY REID, 

Majority Leader, 

U.S. Senate. 

Hon. MITCH MCCONNELL, 

Republican Leader, 

U.S. Senate. 

DEAR HARRY AND MITCH: In considering 

what action, if any, to take on financial aid 

to General Motors and the other auto manufacturers, I urge that the Senate follow regular order and not rush to judgment. 

By letter dated September 21, 2008 I wrote 

to you two leaders with the same recommendation on following regular order on 

the bailout plan then under consideration, 

and then Congress proceeded to act precipitously without appropriate consideration for 

all the complex issues involved. It is true 

that the Senate was faced with an emergency situation on October 1st when the Dow 

had plunged 777 points after the House of 

Representatives rejected the proposed legislation on September 29th. Senators were 

then faced with voting yes or no without 

having the customary hearings, committee 

markup, floor debate and an opportunity to 

offer amendments. As a result, the legislation was filled with pork since no one had an 

opportunity to strike it and the Congress endorsed a plan which had not been given appropriate consideration. 

There are many complex questions which 

need to be answered before the Senate can 

even begin to make a preliminary assessment on aid to the auto manufacturers. We 

need to know the specifics on General Motors’ financial situation. It is reported that 

GM has sufficient cash to keep it afloat for 

a substantial period of time so that immediate financial aid is not indispensable. 

It has been further reported that General 

Motors has sufficient cash and liquidity to 

continue to operate if it was not for the servicing of the debt estimated to be about $50 

billion. That debt is said to have a market 

value perhaps as low as $20 billion and currently calls for an interest rate of 9% annually so that General Motors is paying well 

over 20% on the realistic value of the bonds. 

Some readjustment on that debt and interest 

might alter significantly General Motors’ 

need for federal aid. 

We further need to know what are the realistic prospects that financial aid will solve 

the problem without having GM and the 

other automakers come back for more. The 

automakers have certainly had sufficient notice for years, if not decades, that they had 

to make major changes to become competitive and yet failed to do so. It was well 

known that at some point Congress would 

mandate mileage standards but the automakers did not act aggressively until faced 

with a congressional mandate. We have now 

approved $25 billion in federal aid to assist in 

meeting mileage standards. Why couldn’t 

there be a change in legislation to allow 

those funds to be made available faster and 

to broaden their use beyond retooling factories? It would be preferable from the taxpayer point of view to utilize funding already 

available in a more efficient manner, rather 

than devoting additional resources to this 

industry. 

Beyond these surface questions, there 

needs to be a great deal of analysis through 

the hearing process of many other complex 

questions. 

If the federal government had not bailed 

out Bear Stearns, AIG and passed the $700 

billion bailout, the auto-makers might not 

now be asking for the same treatment. If the 

auto-makers are bailed out, it is a virtual 

certainty that Congress will next hear bailout requests from other sections of the economy. Insufficient consideration by the Treasury Department and the Federal Reserve followed by the rush to judgment by Congress 

on the $700 billion has left my constituents 

perplexed about the competency of the federal government to respond rationally to the 

current problems. In a series of town meetings in October, I found the temperature of 

my constituents at 212 degrees Fahrenheit 

over the $700 billion bailout legislation. In 

extensive discussions with economists, bankers and other financial experts, I have heard 

a virtually unanimous adverse reaction to 

bailing out General Motors and/or other 

automakers. My constituents are frustrated 

with the lack of transparency in doling out 

the $700 billion and the change of course 

from purchasing ‘‘troubled assets’’ to one of 

injecting funds directly into banks. What assurances would we have that these funds for 

the auto industry would be spent wisely, and 

as intended by Congress? Isn’t it wiser to let 

the market make those decisions? 

I will be looking for answers to these and 

other questions when the Senate returns for 

the lame duck session next week. I voted for 

the bailout on October 1st because of the ominous prospect of a domino effect and its severe impact on our economy. I am prepared 

to give fair consideration to economic aid to 

General Motors and other automobile manufacturers because of the national interest including the many jobs at stake in Pennsylvania; but I am not prepared to vote for another massive bailout unless a solid case is 

made following regular Senate order with 

hearings, committee mark-up, floor debate 

and an opportunity to offer amendments. 

I am sending a copy of this letter to Treasury Secretary Paulson and Federal Reserve 

Chairman Bernanke. When the September 

bailout was under consideration, I wrote to 

Mr. Paulson and Mr. Bernanke by letter 

dated September 23, 2008 raising a number of 

questions. I have yet to receive an answer to 

that letter. I would like the views of Mr. 

Paulson and Mr. Bernanke on the issues 

raised in this letter. 

I am also sending copies of this letter to 

General Motors Chairman and CEO Rick 

Wagoner, Ford President and CEO Alan 

Mulally, and Chrysler Chairman and CEO 

Robert Nardelli with the request that they 

give me their views on the issues raised in 

this letter. 

Sincerely, 

ARLEN SPECTER. 

The PRESIDING OFFICER (Mr. 

WEBB). The Chair has been asked to 

note that the Senate is in a period of 

morning business, with comments limited to 10 minutes. The Senator from 

Pennsylvania has spoken for 11 minutes and the senior Senator from Maryland is on the floor. 

Mr. SPECTER. Mr. President, I ask 

unanimous consent to continue for 5 

more minutes. 

The PRESIDING OFFICER. Without 

objection, it is so ordered. 

Mr. SPECTER. I thank my colleague 

from Maryland. 

Mr. President, it seems to me these 

are key questions which need to be answered. The automobile industry obviously is of enormous importance in our 

country. Not to have the automobile 

industry would have very severe economic consequences. But we do have to 

have answers to these questions in regular order. We need to take these matters up so we can cast an intelligent 

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November 17, 2008 CONGRESSIONAL RECORD — SENATE S10541 

vote on this kind of economic aid. The 

question I would supplement is—I 

heard it from my constituents—Who is 

next? Bear Stearns was given economic 

aid, Lehman Brothers was not, and perhaps that was a mistake—perhaps not. 

AIG was given considerable economic 

aid. Fannie Mae and Freddie Mac were 

given considerable economic aid. If we 

are to make an intelligent decision, we 

are going to have to take a look at 

these important questions. 

EXHIBIT 1 

UNITED STATES SENATE, 

Washington, DC, September 21, 2008. 

Senator HARRY REID, 

Majority Leader, U.S. Senate, 

Washington, DC. 

Senator MITCH MCCONNELL, 

Minority Leader, U.S. Senate, 

Washington, DC. 

DEAR HARRY AND MITCH: As you project the 

Senate’s schedule, I urge that we not rush to 

judgment and take whatever time is necessary on any proposed legislation to deal 

with the nation’s economic problems. The 

public, our constituents, have a great deal of 

skepticism, which I share, about legislation 

which will let Wall Street ‘‘off the hook’’ and 

pay insufficient attention to Main Street, 

middle class Americans. 

It is important to focus the legislation on 

the hundreds of thousands of homeowners 

who are at risk of losing their residences to 

foreclosure. 

In deciding what additional powers to give 

to the federal regulators, I believe we should 

give careful consideration to not extending 

those powers beyond the current crisis and 

take steps to prevent a recurrence. 

I have read reports that some Wall Street 

firms, whose conduct has created the crisis, 

will benefit from a congressional legislative 

fix. We should do our utmost to see to it that 

those responsible for the crisis bear the maximum financial burden on any bailout in 

order to minimize the taxpayers’ exposure. 

There are reports that the bailout might 

be extended to foreign firms with United 

States affiliates. In my view, the legislation 

must be carefully tailored for United States’ 

interests and if foreign firms, even if United 

States affiliates are to be involved, then consideration should given to appropriate contributions from those foreign governments. 

I realize there is considerable pressure for 

the Congress to adjourn by the end of next 

week, but I think we must take the necessary time to conduct hearings, analyze the 

Administration’s proposed legislation, and 

demonstrate to the American people that 

any response is thoughtful, thoroughly considered and appropriate. 

Sincerely, 

ARLEN SPECTER. 

(The remarks of Mr. SPECTER pertaining to the introduction of S. 3686 

are located in today’s RECORD under 

‘‘Statements on Introduced Bills and 

Joint Resolutions.’’) 

The PRESIDING OFFICER. The Senator from Maryland is recognized. 

(The remarks of Ms. MIKULSKI and 

Mr. BOND pertaining to the introduction of S. 3684 are printed in today’s 

RECORD under ‘‘Statements on Introduced Bills and Joint Resolutions.’’) 

Mr. BOND. I yield the floor and 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. NELSON of Florida. Mr. President, I ask unanimous consent that the 

order for the quorum call be rescinded. 

The PRESIDING OFFICER. Without 

objection, it is so ordered. 

Mr. NELSON of Florida. Mr. President, as I understand it, we are in 

morning business? 

The PRESIDING OFFICER. The Senator is correct. 

Mr. NELSON of Florida. Mr. President, I would like to be recognized. 

The PRESIDING OFFICER. The Senator from Florida is recognized. 

f 

FEDERAL LOAN TO THE AMERICAN AUTOMOBILE INDUSTRY 

Mr. NELSON of Florida. Mr. President, later this week the Senate is 

going to consider this question that befalls our American automobile industry and the question of whether to extend assistance to the American automobile industry and its workforce. 

What we are going to do—either this 

week or whether it is postponed into 

January—is going to determine the future of a key manufacturing sector and 

millions of American jobs. 

Some of our colleagues have said we 

should not interfere with the free market, that we should allow businesses 

that have acted irresponsibly to fail 

and to be replaced by more efficient 

competitors. I must say I have some 

sympathy for that view. For too long, 

our U.S. domestic automakers have 

sailed against the winds of change and 

have failed to produce vehicles for the 

21st century—for that matter, for the 

last half of the 20th century. 

This is not the first time this Senator from Florida has faced this issue, 

for, as a young Congressman years ago, 

we had a similar issue facing us with 

the bailout of the Chrysler Corporation. I voted for that bailout, which included some $4 billion. In retrospect, 

that was the right decision because 

Chrysler did reinvent itself. But the 

circumstances were different because 

Chrysler had at its helm a man who we 

believed would go in and reform Chrysler, and that was Lee Iacocca. As I look 

across the landscape of the American 

automobile industry, I am wondering, 

where are the Lee Iacoccas? We do not 

see them. 

It is this Senator’s judgment that 

there should be no bailout of the American automobile industry. There should 

not be a reward for poor management. 

But because of the American jobs at 

risk, because of American manufacturing at risk, I support a Federal loan 

with serious restrictions. 

I want to discuss some of those restrictions. I come to this position having fought tooth and nail against the 

automobile companies when they 

dragged their feet on implementing responsible fuel economy standards. 

They insisted, sometimes with crocodile tears, they could not meet those 

miles-per-gallon requirements, and: 

Oh, by the way, let the consumers decide. Those automobile makers are now 

coming to us asking for our assistance. 

But that is not the full picture. As 

the President-elect has said, a failure 

of the American auto industry would 

be disastrous not just for many Americans who work for the industry but for 

the entire economy because those jobs 

ripple with the multiplier effect 

through the economy. So whether you 

are considering assembly plants or suppliers or dealerships, we would face significant layoffs in all 50 States. It 

would push us further and further into 

an economic hole. We simply cannot 

let that happen, but we cannot allow a 

bailout. It has to be a Federal loan 

with a workout, and that is a financial 

term to restructure how a company 

can get out of its economic problems. 

We need to bring all of the stakeholders to the table—management, 

labor, lenders, suppliers—to figure out 

how to revitalize the American auto industry to make it competitive in the 

future while saving those good American jobs. 

So this Senator’s conclusion is that 

any Federal assistance we provide for 

the American auto industry is going to 

have to include these conditions. 

First, we must insist that the automakers increase average miles per gallon to 40 miles per gallon in 10 years 

and to 50 miles per gallon by 2020. Why 

do I say this? There are cars, fleets in 

Japan, that are already driving at 50 

miles per gallon. In Europe, the cars 

are being driven at 40 miles per gallon. 

We are talking about 12 years in the future to achieve this. Technically, it 

can be done if we but have the will. 

Look, in the 8 years this Senator has 

been in the Senate, every year we have 

gotten beaten by the U.S. automakers 

as we have tried to increase the miles 

per gallon in the fleet average. They 

beat us one way or another, and they 

would always say: Let the consumer 

decide—all along while the foreign 

automobile makers were getting prepared to eat their lunch. As their lunch 

was being eaten, year by year, they 

continued to still fight us on the milesper-gallon standards. Finally, we had a 

little victory, just a year ago, that was 

conditioned upon giving them—giving 

them—$25 billion in return for them 

agreeing they would move to 35 miles 

per gallon but not until the year 2020. 

We have to stop this kind of foot-dragging that has gotten them to the place 

they are now. So for any Federal assistance in the form of a loan we must 

insist they increase their miles per gallon. 

Second, the automakers must increase the production of flex-fuel, electric, and plug-in hybrid vehicles. Prices 

of gasoline at the pump have obviously 

fallen in recent weeks, but they are not 

going to stay low forever, and that is 

another whole subject. As soon as all 

the speculators start getting back into 

the oil futures contracts market 

again—which have been deregulated, so 

there is no regulation on the speculators—they will run the price right 

back up. Remember, the price of a barrel of oil is down in the range of $50 or 

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