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[Congressional Record Volume 154, Number 183 (Monday, December 8, 2008)]
[Senate]
[Pages S10790-S10791]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

                        CRISIS IN AUTO INDUSTRY

  Mr. BOND. Mr. President, I rise today to speak on the issues facing 
the crisis in the auto industry as well as the Department of the 
Treasury's Troubled Asset Relief Program or TARP.
  As the economy continues its severe downturn, American families 
across the country face challenges on a level not experienced for 
decades. With hundreds of thousands of jobs being lost each month, 
small businesses and millions of Americans struggling to meet everyday 
needs, the Federal Government is being challenged to come up with new 
solutions. We are clearly in a unique time as we are experiencing an 
economic downturn unparalleled since the Great Depression.
  Our Government has already taken a number of emergency actions to 
prevent an economic calamity but new crises continue to develop. The 
latest and, of course, we think right now the most noticeable crisis is 
the potential collapse of the domestic auto industry.
  Unlike many other industries, the auto industry touches millions of 
jobs and many manufacturing and service industries throughout the 
Nation. We are not talking only about autoworkers in assembly plants, 
we are also talking about auto suppliers, dealerships, repair shops, 
steel, glass, and plastic industries.
  These auto-related jobs are not just in big cities such as Detroit 
and Cleveland, St. Louis, or Kansas City, those jobs support families 
in small- and medium-sized communities across rural America in places 
in my home State such as Dexter, Fenton, Mexico, Riverside, Maryville, 
Moberly, Versailles, and Joplin. I have been meeting with many of these 
people in the last few weeks.
  But despite the real need for temporary emergency assistance to save 
jobs in Missouri and across the country, I do not support a taxpayer-
funded blank check that will prop up failed business models without 
getting the changes that are vitally needed.
  It is a disservice to the American taxpayer to throw good money after 
bad, when these big businesses contributed to their problems. I share 
and understand the ``bailout fatigue'' of most taxpayers, a lot of 
folks in my State, and we are troubled by the Government intervention 
in the private market. But I think it is important to note the failures 
of the auto companies, like the financial markets, are more than just a 
failure of the markets and the industry. It also occurred due to 
Government actions, some of which were pushed by the Congress.
  Congress helped bring about $4-a-gallon gasoline that pushed car 
sales down before the credit crisis--in which we also had a hand--shut 
off car loans.
  Our country, however, is facing a unique economic emergency and now 
is not the time to point fingers of blame.
  It is a time to examine carefully all policy options, including the 
option of doing nothing. But doing nothing for the auto industry would 
mean allowing them to go into bankruptcy. Unfortunately, bankruptcy 
takes several years, and many consumers would not purchase a car or a 
truck from a company in bankruptcy. In fact, recent research studies 
suggest that 20 to 30 percent of shoppers avoided purchasing domestic 
autos in October due to the speculation of bankruptcy. In other

[[Page S10791]]

words, bankruptcy would likely lead to the end of the auto industry. If 
they were to go into chapter 11, debtor in possession financing is 
required to get out of chapter 11, but with the credit markets frozen, 
where would they get that money? That is what we are talking about 
today.
  The collapse of the auto industry would not be without cost to the 
taxpayers. The loss of hundreds of thousands--if not millions--of jobs 
would severely strain our social safety net, as taxpayer funds would 
have to be used for unemployment benefits, health care, and other 
necessary social services.
  For these reasons, I decided I would not turn my back on families, 
small businesses, and communities in Missouri and across the Nation, 
but I would also not turn my back on taxpayers and simply throw money 
after the problem. Facing an economic crisis that is only going to get 
worse, I believe--I have believed, as I do now--action is necessary. 
This is why I worked to craft a bipartisan bill with my colleagues: 
Senators Levin, Voinovich, Stabenow, Brown, Specter, and Casey. This 
bipartisan bill, called the Auto Industry Emergency Bridge Loan Act, 
would provide temporary emergency assistance to the auto industry but 
hold the companies accountable by requiring specific plans with real 
and significant cost-control measures and cuts. Specifically, the 
Levin-Bond bill includes three key principles. First, the bill must 
have strong taxpayer protection. This means taxpayers will be repaid 
for the emergency assistance, and taxpayers would share in the 
turnaround profits of participating automakers. Second, the bill 
includes executive accountability so that failed executives will not be 
rewarded for poor management. Third, and most important, the bill 
includes significant financial reform so that recipients of taxpayer 
funds must demonstrate they have a plan to ensure long-term 
competitiveness, health, and profitability by bringing their costs 
under control.
  This bill would require all stakeholders--including management, 
labor, creditors, and shareholders--to make sacrifices. The companies 
must take real restructuring reform measures that address unproductive 
and duplicative lines and legacy costs that are burdensome. Our 
original bill said we must have the Secretary of Commerce make that 
decision because that is not a decision we in this body can sit down 
and make with stacks of plans in front of us. We want experts in the 
Department of Commerce and those they bring in from the outside to 
determine whether these plans are workable, whether they meet the 
criteria. One of the ideas that has been floated is to have a car czar 
to bring together interested stakeholders, including management, 
unions, and creditors, to negotiate long-term financial viability plans 
for participating auto manufacturers and component suppliers, or we 
need an oversight board to oversee the use of emergency loan funds and 
implementation of any completed financial viability plans to make sure 
the fundamental reforms are made. If there is a czar to be appointed, I 
strongly suggest and I am sure the current administration would consult 
closely with the Obama transition team to make sure they had somebody 
who was mutually acceptable who would work in the Commerce Department 
with the resources there to advise the Secretary, the President, and 
the President-elect that these plans are, in fact, viable.
  It is important to note that the plan we understand is being 
discussed--and our bill--does not provide any new taxpayer funds. 
Instead, it uses previously appropriated funds to provide the emergency 
bridge loans under the program. These funds are then to be repaid to 
that fund to be used for the original clean car retooling program. 
Similarly, using these new funds will not be allowed to change any of 
the clean car efficiency requirements originally imposed on automakers.
  It is encouraging for me and my colleagues to hear in the media that 
many of the people working on it--the leadership--have stated publicly 
their support for the general approach and principles outlined in the 
Levin-Bond bill. While the news has been generally encouraging, we have 
not seen any details of the bill being developed by the Democratic 
leadership. I have been unable to find out from the White House if they 
have seen the details or the wording. It is absolutely important, to 
secure the votes to pass this bill in the Senate, that it contain these 
key principles: taxpayer protection, executive accountability, and a 
viable long-term plan specifically laid out so that we know where they 
are going. Without that, I do not believe the Senate can or should pass 
that bill. There must be strong powers to ensure that restructuring 
measures will be enforced. The czar should be appointed, if we get one, 
by the administration, in cooperation with the President-elect. 
Providing even a short-term bridge loan without a real enforceable plan 
is not a responsible approach. Funds must be conditioned on a strong 
restructuring strategy so that the taxpayers have confidence that it is 
a bridge loan to somewhere that will lead to long-term financial 
viability, competitiveness, health, and profitability.

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