December 8, 2008 CONGRESSIONAL RECORD — SENATE 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. 

f 

TARP 

Mr. BOND. Before closing, I offer a 

few comments on the TARP program. 

Since enactment of the Emergency 

Economic Stabilization Act in early 

October, the Treasury Department has 

spent almost all of its initial $350 billion under TARP to recapitalize several banks and financial institutions. 

It has been reported that the Treasury 

Secretary may request the remaining 

$350 billion as early as this week. 

Under the law, the President must submit a written request that details the 

Treasury Secretary’s plan to use the 

additional funds, and Congress has 15 

days to enact a disapproval resolution. 

However, given the track record of the 

Treasury’s use of the initial $350 billion 

of TARP funds, it is difficult for many 

of us to feel confident that the Department will spend additional funds in an 

effective and efficient manner. The administration is going to have to demonstrate that it has addressed a number of very serious implementation 

issues. As a Senator from the Show Me 

State, I expect to see them. 

Some of these issues are related to 

the management and oversight of the 

funds as reported last week by the U.S. 

Government Accountability Office, the 

GAO. In its report, the GAO uncovered 

a number of management and oversight 

deficiencies that raise serious questions about the program’s integrity, 

accountability, transparency, and effectiveness. Frankly, the GAO’s findings were very troubling. The GAO 

pointed to the Treasury Department’s 

inadequate staffing, failure to establish 

a mechanism to track billions in taxpayer funds provided to the banks, and 

failure to establish a system on how it 

would monitor compliance with executive compensation limitations required 

by the legislation. In other words, it 

appears the Treasury is unable to tell 

taxpayers how their funds are being 

spent and whether the money is being 

spent in a reasonable and effective 

manner. I don’t think that is acceptable. 

The GAO also uncovered other troubling findings, such as Treasury’s lack 

of action to address the foreclosure crisis. As we all know, the housing foreclosure crisis is at the center of the financial credit crisis. In recognition of 

this, the EESA included specific language for the Secretary to address the 

housing crisis. Unfortunately, Treasury has not taken sufficient action as 

communities and families across the 

country continue to be devastated by 

foreclosures. Loan modification efforts 

are failing, as evidenced by the Treasury Office of Comptroller—the OCC— 

data released this morning. According 

to the OCC, about 36 percent of borrowers were more than 30 days past due 

on loan payments 3 months after their 

loan was modified and nearly 53 percent were more than 30 days late after 

6 months. What is going on here? 

These findings raise significant questions, if not doubts, about both private 

and Government loan modification efforts, including those through the Department’s so-called HOPE NOW Program. As I previously warned, the administration’s and Congress’s push to 

use the Federal Housing Administration to prevent foreclosures by refinancing subprime and troubled loans 

may end up costing taxpayers a lot of 

money in the near future. Rescuing the 

FHA through taxpayer funds is not surprising to those who have watched the 

FHA closely and know they have longstanding management and oversight 


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S10792 CONGRESSIONAL RECORD — SENATE December 8, 2008 

problems and lack of resources. Clearly, a more aggressive, comprehensive, 

and smarter approach to the foreclosure crisis must be taken if we are 

to recover from the recession. 

The housing crisis has now spread 

from subprime mortgages to prime 

mortgages as economic factors impact 

borrowers’ ability to pay their mortgages. Due to expansion of the mortgage crisis, it is critical that we find 

measures to protect and create jobs. 

The importance of jobs and its impact 

on the housing crisis further raises the 

importance of devising a responsible 

rescue package for the auto industry 

since millions of jobs are at risk—over 

3 million jobs in the Nation, 220,000 

jobs in Missouri. 

TARP has also disappointed me by 

the ad hoc implementation of the program. Prior to the creation of TARP, 

the Department seemed to be improvising on a daily basis its intervention 

with financial markets. One of our intents in creating TARP was to provide 

a structure and coherency to the Government’s approach to the financial 

crisis. That we have not seen. Before 

this and the next administration submit a request for the remaining TARP 

funds, we expect to have answers to the 

questions and issues raised by the GAO 

and others. The Government needs to 

provide more certainty on how it will 

address the financial and economic crisis and provide answers to taxpayers on 

how it has spent taxpayers funds already provided. 

These are very serious times. I want 

to see action by this Congress. I want 

to see us move quickly. But I also want 

to see action by the auto industry to 

advise the czar or the Secretary of 

Commerce, and I want to see action by 

the Treasury to give us a better idea of 

how TARP funds are being used, how 

they will be accounted for, how they 

are going to be implemented, and how 

they are going to be used. If they don’t 

have an approach, I will come forward 

with a suggestion on how we restructure those home loans that are in crisis. 

I ask unanimous consent that Senator BROWNBACK be added as a cosponsor to S. 3715, the Auto Industry Emergency Bridge Loan Act. 

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

Mr. BOND. I yield the floor and suggest the absence of a quorum. 

The ACTING PRESIDENT pro tempore. The clerk will call the roll. 

The legislative clerk proceeded to 

call the roll. 

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. 

Mr. SPECTER. Mr. President, I arrived at the same time as the distinguished Senator from North Dakota, 

and I ask unanimous consent that he 

be recognized following my brief presentation. 

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

f 

ECONOMIC AID TO AUTO 

INDUSTRY 

Mr. SPECTER. Mr. President, I have 

sought recognition to discuss the issue 

as to what Congress should do, if anything, with respect to economic aid to 

General Motors, Ford, and Chrysler. 

This is an issue which has been very 

much in the news, with the prospect 

that one or more of these companies 

might not survive—probably would not 

survive—in the absence of some aid 

from the U.S. Government. 

Last Tuesday, I convened a meeting 

in Philadelphia attended by key executives from each of the Big Three, labor 

leaders, the head of the Pennsylvania 

AFL–CIO, the head of the Pennsylvania 

United Auto Workers Community Action Program, and the head of the 

Philadelphia Labor Council. Also in attendance were dealers, suppliers, and 

economists to review the situation, to 

get a background, to understand it better, to provide for the consideration 

this week of the issue which will be before the Senate. 

At that meeting, the Big Three 

painted a very gloomy picture. Ford 

was in the best position of the three, 

having arranged credit some time ago, 

and they had a request pending for 

some $9 billion in standby aid. They 

were not asking for it, but only want it 

available in case their situation came 

to the point where they actively needed it in order to survive. The CEO of 

Ford said that if the $9 billion was requested and received, he would then 

serve for a dollar a year. 

The projections from General Motors 

and Chrysler were considerably gloomier than Ford, with the statements 

made that if they did not get aid by the 

end of the year, they might have to go 

into bankruptcy, or to Chapter 11 

bankruptcy proceedings. The suppliers 

were very concerned about the impact 

on their situation. The auto dealers 

were similarly concerned. Labor is very 

worried about the loss of jobs. So it 

was a very gloomy meeting overall. 

On Thursday, I convened a meeting 

in the Lehigh Valley. We did not have 

representatives of the Big Three, but 

we did have labor locally, dealers, 

bankers, economists who evaluated 

that situation. I joined with Senators 

LEVIN, STABENOW, BOND, VOINOVICH, 

and BROWN on November 20 in endorsing legislation to assist the Big Three, 

to say that it is something I would be 

willing to consider in light of the projected difficulties and the ripple effect 

it could have on the economy. 

My statement in the news conference 

which we held and a statement on the 

Senate floor was that my view was limited to consideration of such economic 

aid conditioned on the Big Three having plans to move forward which would 

present the realistic likelihood that 

they would be able to succeed. Considerable attention was given in the meetings which I held last week in Pennsylvania to the alternative of bankruptcy, 

and there have been many who have 

said bankruptcy would be the appropriate course as bankruptcy proceedings were held with the steel industry and the airlines, and that was 

the way to resolve the issue if the Big 

Three could not survive. One point 

which all of the Big Three agreed upon 

was that if one failed, they were all 

going to fail. 

The considerations with respect to 

bankruptcy which were considered at 

the two meetings I held were the contention that bankruptcy would be unacceptable to have the survival or having the Big Three come out of bankruptcy because of the difference between the automobile manufacturer 

situation contrasted with the steel industry or with the airlines. When buyers are looking for a car or looking for 

a warranty, they expect the companies 

to be in existence for protracted periods of time, so that the argument was 

made that Chapter 11 proceedings or 

bankruptcy generally would not be acceptable. 

I commented at these meetings, as I 

did on the Senate floor and in the news 

conference which the six Senators had 

on November 20, that the public sentiment is very much opposed to bailouts. 

After the $700 billion legislation was 

passed on October 3, I traveled the 

State of Pennsylvania and had town 

meetings. I found the temperature of 

my constituents was at the boiling 

point, 212 Fahrenheit, and, in fact, the 

thermometers were broken. I commented to the town meeting attendees 

that the vote which was taken in the 

Senate was a strong vote—74 to 25— 

which was a very strong vote, because 

of the potentially catastrophic consequences of what would happen to the 

economy. We didn’t like the bailout of 

Bear Stearns or the bailout of AIG, and 

Lehman Brothers was not bailed out, 

and there were major regulatory problems which would be addressed by the 

Congress. Those who had made false 

representations on the balance sheets 

saying that the companies were worth 

falsified figures, knowing them to be 

false—that is fraud—and there were investigations, criminal investigations 

underway, and that as in the Enron situation, people could go to jail for making those false representations. But I 

make that comment because of the 

public view which is opposed to the socalled bailouts; that it ought not to be 

the Government which picks winners 

and losers, but it ought to be the market which picks winners and losers. I 

repeat what I have said in prior floor 

statements which is that the Big Three 

have a very steep burden of proof and 

that the Big Three will have to come 

up with a plan which is reasonably and 

realistically calculated to succeed. We 

are now talking about various oversight provisions, talking about limited 

compensation, golden parachute plans 

which will make the Big Three competitive in a very difficult market, and 


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