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Panel I of a Hearing of the House Financial Services Committee - Stabilizing the Financial Condition of the American Automobile Industry

By:
Date:
Location: Washington, DC

REP. FRANK: We are going to begin right away. There is -- and I apologize for the schedule conflict; it couldn't be avoided -- a Republican conference today. We're going to accommodate our Republican colleagues. The ranking member is here. He is needed at his conference. I noticed Mr. Upton has come to testify. I'm going to take the Republicans right away because they do have that conference to go to. So I am now going to recognize, for his opening statement, the ranking member of the committee.

REP. SPENCER BACHUS (R-AL): Thank you, Mr. Chairman.

If the U.S. automakers didn't play such a central role in the American story, we wouldn't be here today. But the big three stand as emblems of the American dream, and they've been an integral part of the American economy for generations. Because of that, they're special to all Americans.

GM, Ford and Chrysler have hit hard times. They're now asking for taxpayer help. Even though all Americans, I would hope, want this industry to succeed and the workers that work at those factories, I cannot support a plan to spend taxpayer money to bail them out.

My initial problem justifying these loans to the big three is when I speak to my constituents, and it is a fairness issue. The vast majority of my constituents are not making anywhere near what General Motors, Chrysler and Ford pay their employees.

Even with recent changes, the average hourly wage at General Motors is still $75 an hour. That's 50 percent, 100 percent, or in some cases three or four times what my constituents are making. My constituents do not understand why their taxpayer dollars should go to support what they consider less efficient businesses.

And that raises a second issue, which is that a bailout is not a solution to the fundamental problems of the big three automakers. A bailout of the auto industry will just push the problem further down the path. To survive, the big three are going to have to change and become more efficient and competitive.

I'm not sure that management and labor are willing to make that sacrifice. Both management and labor at the big three have pay and wage scales that are substantially higher than their competitors. That's not being anti-management or anti-union. It's just being truthful.

A bailout to me raises fairness issues, does not solve the problem. And additionally, a bailout is not good economics and it's not the American way. We believe in fair competition and free markets. The markets are unforgiving and they can be hard, but they're very good at showing business the path to long-term success.

The American way to solve this problem is not to depend on the government for a solution. The government handing them taxpayer money and telling them how to run their business is also not the American way and will only lead to prolonged pain.

The American way to solve this challenge -- and it's a challenge for all of us -- is for all the parties involved to sit down at the table and hash out a solution that will make these companies competitive in the long term and assure their survival. Once they've done this, and not until they have, I believe they should not come to Congress and the American people and ask them to sacrifice. Once they have made this sacrifice, I believe the American people and this Congress will be more receptive.

Unfortunately, the parties have not had the fortitude and foresight to make admittedly difficult decisions that needed to be made. They have made some. They made them last year in some wage issues. But it's not enough. Unfortunately, in the case of the big three, the parties have been unable to make the difficult decisions that could be made to strengthen their businesses. It is important that management and the union stop kicking the can down the road, sit down and resolve these important issues. Sacrifices will be required, as in the case of all challenges and changes.

Let me conclude by saying if we continue down the path of taking money from more efficient and competitive companies and giving them to companies with less efficient models, and those that are in trouble because of bad management and bad decisions, even with good intentions, our overall productivity as a country will continue to suffer. While we will avoid a certain amount of pain in the short term, we make the situation far worse in the future. By rewarding failure, we send a signal to the marketplace that we live to regret.

Finally, we need to protect the taxpayer. The American people have bailout fatigue. During hearings last week and again yesterday, I said we needed an exit strategy from the string of bailouts, and we still do.

I yield back the balance of my time.

REP. FRANK: We'll now go to our congressional witnesses. And again, given the Republican conference going on, I'll begin with the gentleman from Michigan, Mr. Upton.

REP. UPTON: Well, thank you, Mr. Chairman. I appreciate your willingness to go out of regular order to allow us to do that, as we're expecting votes perhaps as early as 10:30 within our Republican conference.

Our economy is in trouble. That's not news. There's uncertainty in the market, and job losses are mounting. It is our responsibility as lawmakers to act decisively to reverse this economic downturn and save millions of American jobs.

We all know what's at stake. The financial rescue plan that Congress passed just before the election was for a large part opposed by many of our constituents. Most Americans saw that bill as a bailout for Wall Street, when help is desperately needed for Main Street. I opposed the administration's initial proposal and later pressed Secretary Paulson to use the authority granted under the measure to help average citizens, not just $147 billion for AIG, especially as AIG's execs were holed up on a posh resort on Uncle Sam's dime.

My concerns were answered with a plan that I supported containing stronger oversight and a variety of provisions intended to help Main Street. They have failed in meeting that congressional intent. And Paulson said of the vote, quote, "This was obviously a very important vote. It was a vote to protect the American people, protect their jobs, their economic well-being. It was to protect the small businesses, people's savings," end quote. That's what he said.

I asked Secretary Paulson, "Does allowing our U.S. auto industry to die and losing millions of jobs supported by this vital industry fulfill his definition of protecting American jobs or small businesses?" Denying support to the auto industry, losing millions of jobs across the country, runs counter to the initial intent of Congress in passing a rescue package that is completely unacceptable.

President Bush and Secretary Paulson should know that the U.S. auto industry is Main Street. The auto industry is American jobs. The auto industry supports countless small businesses all across the country, and the U.S. auto industry created the middle class and the manufacturing sector, the backbone of our very economy. You don't get more Main Street than the U.S. auto industry. And turning our backs at this time would be a disaster for our economy.

Earlier this week, everyone in the financial sector cringed when Citibank announced layoffs of over 50,000 employees. Now, imagine the economic impact of multiplying those job losses by 50. That's the magnitude of what's at stake today. If we lose one of the big three, we'll lose literally perhaps as many as two and a half million jobs almost overnight, and the ripple effect will be devastating on the national scale. Not only will we lose those jobs; we'll also lose over $100 billion in tax revenue and $275 billion in middle-class income over the next three years.

So let's look at what we're talking about here -- $25 billion in loans that will get paid back versus $100 billion in lost tax revenue, millions of jobs lost, and a prolonged economic crisis. There is (mass ?) support for helping automakers and their are millions of employees survive this crisis. There is fear out there, not just in Michigan, that the collapse of GM, Ford and Chrysler could, would trigger an economic depression. Americans understand that the auto industry is extremely important to the U.S. economy, not just for Michigan.

The legislation that we passed wasn't supposed to be about bailing out Wall Street, but rather protecting working families, students, retirees and all taxpayers, every one of them, from the consequences of a financial meltdown. If the White House won't use its existing authority to protect Main Street jobs, then Congress must act again to ensure that they do.

The people of Michigan are suffering tremendously, big-time, with the highest rates of unemployment and home foreclosures in the country. And while there's plenty of blame to go around, we cannot stand idly by as the pillar of our economy collapses, the aftershocks of which would further damage our nation's economy.

The state of Michigan already has an unemployment rate of nearly 10 percent. To do nothing and watch the domestic manufacturing sector crumble would further fan the flames of unemployment on a national scale in a way which we haven't witnessed in our lifetime.

I yield back the balance of my time. Thank you, Mr. Chairman.

REP. FRANK: Next we will go to the Levin of your choice. Who goes first? Are we going by age or branch?

SEN. LEVIN: We've never disagreed on anything, I think, in our entire life. We're not disagreeing on this one.

So --

REP. FRANK: Our colleague -- we'll go by age -- our colleague from the House. (Laughter.)

SEN. LEVIN: That's the one thing that we disagree on as a matter of fact. Mr. Chairman and members of the committee, thank you so much for the opportunity to testify this morning.

When today's hearing is over and our witnesses go back to the challenges they face to save their companies and to save this economy, the spotlight is going to be on Congress. It's going to be on what is our response to the plight of an industry which results from an economic downturn not of their own making. The collapse of our domestic automobile industry would be, in the words of President-elect Obama, a disaster for the entire economy.

The auto industry is like no other industry in this country. Ten percent of the nation's jobs related to this industry. The industry accounts for 20 percent of our retail sales, their dealers are on every main street in America and their suppliers exist in most of our states. So where are we in Congress today? Where's the Congress?

The president says that he supports bridge loans. The president- elect says that he supports bridge loans. The Speaker supports bridge loans. The majority and minority leaders in the Senate support bridge loans for the auto industry. So where's the problem? What are the barriers when that leadership supports bridge loans for the auto industry? Well, there's no disagreement over the fact that conditions need to be attached to the loans. Everybody who supports the loans agree that these loans must be accompanied by strong oversight, taxpayer protections, a financial plan which outlines the company steps to produce energy-efficient advanced technology vehicles and to achieve financial recovery.

There's agreement that there should be limits on executive compensations, bonuses and golden parachutes. The problem now -- the problem now is that there's no agreement on the source of the funds for the bridge loans. My preferred course is contained in legislation that Senator Reid introduced Monday to provide bridge loans to the auto industry. That approach would take just 4 percent of the $700 billion made available by the Emergency Economic Stabilization Act which -- after all was enacted to try to restore stability -- to try and ensure stability -- in this economy. And The White House says, no. They don't like that source of the loan, although it's only 4 percent and the failure of this industry would have this kind of a destabilizing impact.

What The White House wants is to use the so-called Section 136 Energy Department funds, which we provided earlier to support development of energy-efficient advanced technology vehicles. Now some of the Section 136 supporters say no to that source of funds. Well, time is shorter than short. People in communities across this country are anxiously awaiting what is Congress going to do. And there appears to be so much support at least among the leadership here and among -- between the president and president-elect. Where there's that kind of support are we going to permit a difference over the source of funds for these loans to destroy and opportunity to help an industry so essential to this economy?

Now I know there's frustration with past actions of the U.S. auto companies. Blame them if you want for quality problems in the 1970s or for paying their executives and their workers too much. If you want to blame them for not moving aggressively enough to produce advanced technology fuel-efficient cars -- don't throw millions of jobs in a vital segment of this industrial and defense economy overboard in that frustration.

There was an article in this morning's paper which, to me, was the most important of all the articles in the papers this morning -- as important as important as our hearings were yesterday in the Senate and your hearings were here. This article is headlined the following: "Facing a Slowdown, China's Auto Industry Presses for a Bailout from Beijing."

This is not just the domestic automobile industry which has got problems because of this global economic slump, this is a worldwide problem. And the question is will we have an industry when this slump is over? China is going to have an industry. Germany is going to have an industry; read what the prime minister of Germany Merkel said. She's going to make sure Opel gets enough money, if necessary, to keep going. European auto makers have asked for $56 billion in loans. No auto-producing country in the world will permit their industry to go under. They're being asked for and will provide loans for those industries. We can do no less.

Thank you, Mr. Chairman.

REP. FRANK: Thank you. I just want to acknowledge that this is a matter of great interest and while we have a number of Michigan representatives here we've been joined by the gentlewoman from Ohio, Ms. Kaptur, who is here because of the importance of this to the state of Ohio and also the gentlewoman from Texas, Ms. Jackson Lee. Any members who want to sit up here -- and of course our very distinguished colleague, Mr. Kildee, who I think is waiting for a chance to get there.

I wonder if it would be all right with Ms. Kilpatrick and Mr. Levin, there is the Republican conference -- could I go now to Mr. Hoekstra -- Ms. Miller and Mr. Hoekstra? Are you in a great hurry? If I could get them -- now, let me also say to Mr. Upton I've consulted with the ranking member. I believe we can save our questions for later. If we have questions we'll get you on the floor; we know where to find you. So having testified feel free to leave. I know you have your conference. It's not a sign of your lack of interest. And I'll go first with Mr. Hoekstra and then with Ms. Miller and then we'll continue with the others -- five minutes please.

REP. PETER HOEKSTRA (R-MI): Thank you Mr. Chairman, it's good to be here. And I'm glad you're having the hearing.

Let me -- I'll submit my statement for the record and let me --

REP. FRANK: Without objection all oral statements from all members will be printed in the record.

REP. HOEKSTRA: Let me just summarize the points that I would like to make today.

Clearly the automobile industry is critical to the U.S. and it's critical to Michigan. That's not up for the debate. Critically or also essential, if the Big Three receive taxpayer funded infusions of cash, I believe all the rules change -- and I'll explain that as I go through my statement. But I think that as a committee and as a Congress we need to consider a wide range of alternatives as we take a look at how to get the automobile industry healthy again.

The first thing that I think we need to do is we need to take a look at the federal and the state level to provide incentive so that the consumer can be the driving force behind getting a healthy industry -- drive demand. At the federal level I think we should consider a tax credit for new car purchases. At the state level I think we should take a look at the state policies. Michigan has an illogical sales tax. When someone in Michigan buys a new car they pay a sales tax on the full purchase price of the car. The state of Michigan should take the lead. We should only charge sales tax on the differential -- the difference between the purchase price of a new car and the trade-in value. So I think the states and the federal government need to take a look at how we can drive demand for new car purchases to help get the Big Three moving.

The second thing that I think we need to do is we need to take a look at some of the federal policies that have or will be implemented or are considered being implemented. The first is we've provided this $25 billion for the industry to re-tool itself to move towards new CAFE standards. In this economic downturn, is it appropriate for us to consider delaying the implementation of CAFE standards for a period of three to five years and use those dollars for other things -- or recognizing that provides significant savings to the automobile industry and that might be preferential to an infusion of taxpayer dollars into the auto fleet?

The second thing that we ought to consider is there's been a lot of discussion about whether there will be state standards for CAFE or emissions. Should Congress reassure the Big Three that we are going to have a consistent national standard for safety standards, for cafe standards, and emissions standards so they don't have to worry about the complexity or the confusion that they would be under if states started implementing various standards for them to meet for them to sell their cars in their states?

A third point is if the committee and Congress finds itself moving down the path of providing taxpayer assistance, the rules do change. These companies, the workers, employees and management, are now accountable to the shareholders. We have a fiduciary responsibility to protect the interest of the taxpayer. Yes these companies and these employees now are accountable to Joe the Plumber and others. You know, in my district the average manufacturing salary or the average manufacturing salary across the country is $31 an hour, including fringes. For the transplant companies it's $48 an hour. For workers in the Big Three it's $73 per hour.

Should manufacturing workers who are making $31 an hour, $48 an hour -- should their taxpayer dollars be used to provide assistance to blue collar and white collar workers who are maybe making significantly more than what they are?

These are struggling industries. I've got a lot of these suppliers in my district. There needs to be an element of fairness and sacrifice as we go through this process.

Mr. Chairman, I'm glad to see that in, I think, some of the legislation that you've brought forward you've strengthened the requirement on CEO pay and capping CEO pay, because what we've seen in the financial bailout package, you know, when the companies set aside $40 billion for bonuses, we've done something wrong.

And Mr. Chairman, of interest to yourself and myself, let me raise one final point: federal prison industries. Federal Prison Industries -- how does that fit with the automobile industry? Federal Prison Industries is an $800 million business, rapidly growing to be a $1 billion business. They make $150 million of automobile components and they make over $100 million of office furniture. These are industries that are struggling. They should at least have the opportunity to compete for that business.

Thank you, Mr. Chairman.

REP. FRANK: The gentlewoman from Michigan, Ms. Miller.

REP. CANDICE MILLER (R-MI): Thank you very much, Mr. Chairman, the ranking member, as well as all the members of the committee.

I can't tell you how much sincerely I appreciate you calling this hearing and allowing all of us to come here today and make our case for saving millions -- millions of jobs -- not just in Michigan, but all across our great nation.

You know, a number of critics have said that the domestic auto industry is a dinosaur -- too fat to survive. But the truth is that over the last number of years, America's domestic auto manufacturers have made very tough decisions to make their operations cleaner and more competitive.

In Michigan, unfortunately, we've seen the loss of over 400,000 manufacturing jobs as the auto companies have restructured themselves. And if those critics who think there's just too much fat in the industry really think that, I would invite them to come to Detroit. Come to, for instance, Macomb County -- which I'm very proud to represent along with Sandy Levin and Carl as well — and to visit some of those who have been laid off; or maybe they could visit with some of those homes that are now in foreclosure; or visit some of those who have worked their entire life and are now fearful that their jobs are going to go away; or they could visit with some of the retirees who worked so hard to earn their pensions and now face a loss of substantial portions of their income, if their pensions are thrown into the PBGC; or, you know, perhaps they could tell those people that they are part of an unsustainable business model and that they need to be sacrificed.

The fact of the matter is that this industry, for all of its faults, has made very tough decisions. It's cut to the bone and it's dealt with crises after crises to return to profitability. It's been handed new government mandates -- regulatory mandates -- that the experts say will cost this industry as much as $86 billion in order to comply, and of course, this at a time of an economic downturn. It's dealt with skyrocketing health care costs and it's worked with its employees to make major concessions to help the company survive.

But the final blow was an economy in a meltdown situation, brought on not by the mistakes of the auto industry, but by those on Wall Street. And many have said that the problem with the domestic auto industry is that they don't make products we want to buy any more and that is simply untrue! Do you know which company actually makes the most models that get over 30 miles to a gallon? That is General Motors; or how about the car company that has the highest mileage SUV in the entire world? That company is Ford -- and I'm proud to by a Ford Escape hybrid.

It's General Motors that's working to bring the very next great innovation to the auto markets: The Chevy Volt extended range electric vehicle could revolution the industry and it will do it with American-designed and American-built technology.

So the domestic auto industry's problem is not a lack in product, because that product is getting better each and every day. The problem is a lack of customers brought on by the economic meltdown. The actions of Wall Street have stifled consumer confidence and they've frozen the credit markets and made auto loans unavailable for too many consumers.

Last year, over 16 million vehicles were sold in this country. And in October, the annualized rate of vehicle sales was at 11 million and that is the result -- that is not the result of the product. That is the result of consumer confidence and the availability of financing.

So this Congress just seven or eight weeks ago passed a $700 billion bailout of the banking industry to help Wall Street to better times and to free up credit. Seven hundred billion sent to those who caused the problem in the first place. And today, all we are asking is that 25 billion (dollars) of that money be targeted as a bridge loan to support the domestic auto industry.

And I would say this as well, Mr. Chairman, and all the members of the committee: I hope you think about the very rich, rich, rich heritage that the domestic auto industry has had on our nation. In times of need, in times of national crises, southeastern Michigan was actually, during World War II, we were known as the arsenal of democracy, because we had the manufacturing capability to build the armaments that literally led the world to peace! There were a couple years we didn't even produce automobiles, because we were producing tanks and jeeps and we were fully engaged in the war effort. And I hope we would think about that as we're looking at, perhaps, the demise of a huge segment of our manufacturing segment.

As well, after the horrific attacks of our nation of 9/11, when the terrorists were trying to bring our economy to its knees, it was the domestic auto industry -- led by General Motors, I would tell you -- that started the Keep American Rolling program with the zero interest financing and the rebates, et cetera, that kept the workers working, that kept Americans buying.

And I will also say this -- and let me just close on this: The domestic auto industry literally created the middleclass of this great nation! The middleclass was not created by AIG or Bear Stearns or Lehman Brothers or whatever. They might have created the upper class, but they did not create the middleclass. The middleclass was created by this great industry.

We are facing some tough economic times. We're asking for a loan -- not a bailout, but a loan. And I think it's entirely appropriate for this Congress to see that happen.

Thank you very much.

REP. FRANK: Before I turn to Mr. Levin, let me just say -- we don't want -- (inaudible) -- to our TV audience, but let me make a factual statement. I've been watching -- it may appear to people watching this that there's some lack of interest on the Republican side on this important issue.

I want to stress again, unfortunately, there was a scheduling conflict. The Republican House members have a conference that's going on now -- their official organizing conference. It's important that they be there. The fact that there are more Democrats than Republicans is no indication of a disparage interest. It is -- we unfortunately had this situation where people had to be in two places at one time. And I know as soon as they can, they'll be coming back. And I didn't want to have any false impressions created by TV -- God forbid that should ever happen!

The gentleman from Michigan.

REP. SANDER LEVIN (D-MI): Thank you Mr. Chairman, and ranking member Bachus and all of my colleagues.

I was in the Senate yesterday and heard some of the testimony and I think issues were raised and answers were given -- and awfully good answers in most cases if not all.

I think what was missing is the sense of urgency -- a sense of urgency. Lehman Brothers went under. This government did not act. A spark was set off that went around the world. This industry now faces utter urgency. Yesterday, the big three indicated how much they thought they might well draw on the $25 billion. They needed it and they need it as a bridge in the next few months.

We can't leave here this week and take a chance! President-elect Obama has said that the auto industry is the backbone of American manufacturing and we can't leave here and see the backbone splintered.

This is an international credit crunch. My kid brother -- I'm older -- referred to China. Europe is being asked -- a commission -- for over $50 billion to help their auto industry. And we're thinking of leaving here and taking the risk of bankruptcy? There's a looming cliff and we have to act!

I want to spend a few minutes, if I might, talking about some of the issues, Mr. Bachus, that you raised.

You talked about people sitting down and facing the problems. I worked in the auto industry when I was a kid. It's a very different industry from then, to say sure -- to be sure -- and from 10 years ago, and I think from five years ago. As has been mentioned by others, there's been restructuring and cost cutting. Look at the number of employees that have gone -- GM has reduced it's headcount by 84,000; Chrysler 32,000; Ford by 51,000. They've closed plants and they've done this in discussions with the labor movement.

There's a talk about quality and I hear some reference to dinosaur. Ford, for example, has tied Honda and Toyota in quality -- according to the Consumer Report. And as mentioned, GM has more cards 30-miles-per-gallon than any other company -- a dinosaur?

The Chevy Vault, Chrysler warranty claims dropping. This is a vibrant alive industry that now has improved and faces a circumstance outside of its control. And everybody else is acting in this world and are we going to leave and not act?

Let me just say, if I might, about bankruptcy. I saw two articles today in the paper. One by Mitt Romney, I won't comment. Because he came to Michigan and said, I'll fight for the auto industry. The other went through the bankruptcy issue. Bankruptcy Chapter 11 will mean Chapter 7 and the liquidation of a company. People may get on an airline and go from Washington to Erie, Pennsylvania -- or I forget Wilkes-Barre, Pennsylvania, but they won't buy a car if they're not sure of their service, if the warranty won't be met.

So let me say one last thing about an issue that has not been well versed, I think. My brother is modest. He, years ago, worked to have developed a national automotive center in the defense area. It's in Sterling Heights, the district I represent. It has the -- and I'm almost done -- it has the responsibility for the development of vehicles for the military. There's a complete interaction between the automotive center and its development of motor -- of vehicles for the military and the Big Three. Is there going to be that kind of synergy between the Defense Department and companies that are owned and run by foreign manufacturers? We can't stand to lose the domestic auto industry for either economic or national security purposes. We need to act this week.

REP. FRANK: The gentleman from Alabama had asked for 30 seconds to make a clarification.

REP. SPENCER BACHUS (R-AL): Thank you, Senator. I appreciate your -- or Congressman -- I appreciate your remarks. Let me say this, I have never myself -- and you didn't say this -- but I've never said that GM or Ford or Chrysler was a dinosaur. I would never say that. In fact, I drive two GM cars and they're great cars. I drive a Ford car. There are some cars -- we all know, that there are a lot of models and a lot of problems. They've made changes. I don't think the American people are aware of the changes they've made.

And finally, this thing about AIG, they pay their employees a lot. And I realize that when you give to AIG and you give Lehman Brothers it, you know, part of fairness is why not the automobile industry? And it, to me, is every bit as important as those Wall Street companies, if not more so. So, you know, I think that what we're looking for is sacrifice and assurances to make sure that it's a solution and not just a postponement.

REP. LEVIN: Mr. Bachus, I fully agree and the Big Three have agreed to a new wage structure. People are going to come into their plants earning $14 bucks and hour and not have a defined contribution plan. And I think if people can aspire to have good healthcare and pensions, like was worked out between the Big Three and the United Automobile Workers, that's an important part of America, an aspiration to a solid middle-class. And I think you agree with me.

REP. FRANK: I would just note -- and I know -- get the gentlemen's point -- but Lehman Brothers is probably not the best example of people who got anything. They got stiffed but

REP. BACHUS: That's right

REP. FRANK: But there were others who --

REP. BACHUS: Bear Sterns, all of them.

REP. FRANK: The gentlewoman from Michigan.

REP. CAROLYN CHEEKS KILPATRICK (D-MI): Thank you Mr. Chairman and members of the committee for allowing us to come today before our powerhouse CEOs who run the most effect, outstanding manufacturing companies in our country and the world.

The American automobile industry is alive and well. Employing over 13 million direct and non-direct employees who benefit from the over $340 billion worth of payroll every year. I come today to ask for your quick, honest, thorough, comprehensive review of what we have before us today.

The country is in total crisis, as is our industry at the moment. It is the last manufacturing base that we have in America. We must save this industry because of that manufacturing base as well as -- it moves through our energy independence as we move into this 21st century. Our car companies will build better, more efficient, environmentally sound cars as we move forward and have made that commitment in previous energy legislation that has come before us. The jobs, the businesses, the revenue that our federal government, state government, local cities and townships receive from this industry is paramount. It's not to be taken lightly.

As was mentioned by a couple of our other Michigan bipartisan panel as you've had, Mr. Chairman, the military, our own military, is at stake here. Our car companies build the tanks, build the Humvees, build the armed resistant tanks that go through these wars -- and I hope we end this war very soon. Lest we have none, do we want to turn that over to our competitors? I think not. Our military and national security are at stake here.

Since World War II, when our automobile companies built those same vehicles and helped us to win that war, the tanks, the jeeps, the trucks that support the men and women in our military often create the technology that helps us navigate in our own personal cars; brakes that last for thousands of miles -- no other car company can say that. They protect our bodies in accidents. We cannot afford to lose these intellectual properties that the American automobile industry, only they, provide today as we move forward. Our economy and our troops cannot survive if, in fact, our American automobile industry goes under. And we know you won't let that happen. It's a loan.

In the '80s when Chrysler came to this Congress and asked for assistance -- at that time I a member of the state House of Representatives -- not only did we give that loan, Chrysler paid the loan early and our federal government made $800 million more than was given to them at that time. I predict, when we allow this company, these companies to do the same we'll see growth and development and energy independence move as we move throughout this time of our lives.

It's a critical time. Some of our employees -- some of our colleagues, let me say that first -- don't understand it and a lot of times as leaders we have to be the ones -- which is why we are chosen leaders -- to educate, to demonstrate and let our constituents know that the American automobile industry deserves our assistance, deserves the protection of those 13 million-plus -- and in my written testimony we've outlined from the sources of the Bureau of Labor Statistics, the Center for Automotive Research and the National Automobile Dealers, over 13 million job-related-jobs in this economic automobile industry that we have before us.

So we've got to be very serious. And as my colleague says, we have to be very quick. This is not something that can languish over to the next, next administration, really over for the next month. It is that critical. Over 1 million pensioners who built the industry, who helped to build the middle-class, who deserve their pensions to be protected are a part of this bridge fund that we're asking you to approve for us. So as we come to you today, just know that the energy independence, the manufacturing base that is the only one left in our country, the revenue that's generated from these companies is the sustaining force of our country.

It's not a bailout. It's a loan. We will return it. Five percent interest over the next five years, another 9 percent over the second five. Don't let the automobile industry die because of our inaction. We have a responsibility to the children, to the villages, to the schools. We have a responsibility to the workers to make sure that they can have a decent living. We are in a very precarious situation as our country moves into the next administration and throughout this century. What we do over the next 24, 48 hours will determine what America will be for the next 50 to 100 years. I urge you to act.

And thank you, Mr. Chairman, for your bill with some of the things that you've put in your bill that will help as we monitor and work with the auto dealers, the auto companies.

And let me just as I close to say something about the dealers and the ethnic dealers particularly. I'm told that over the next 60 days, if something is not done, we'll lose over 60 minority automobile dealers. If it's longer, over 700 will go out. And neither the bridge loan nor the restructuring loan addresses that. I'm pleading for you, Mr. Chairman, and this committee that we take a look at that. Those are thousands of families, thousands of children, revenues to cities and villages that must be protected.

Thank you for the opportunity to testify before you today. I ask that you move swiftly and assist the only manufacturing base that we have in America. It's the healthiest, the best. We ask for your assistance. Thank you.

REP. FRANK: I thank the gentlewoman. I thank all of my colleagues for testifying quite succinctly on the point. We will excuse all of our colleagues now. And I did have a request because there's some other, the gentlemen from California, Mr. Baca, had a simple request, I believe.

REP. JOE BACA (D-CA): Well thank you very much, Mr. Chairman. And I appreciate you holding this very important meeting right now, especially on the automobile industry because the American people and the taxpayers are asking us to do something about this recession, and this impacts the recession right now based on the amount of jobs that will be lost. And basically what we're asking for is a loan.

There's a whole difference right now in reference to the automobile industry asking for a loan to enable GM, Ford, Chrysler to continue operating and avoid liquidation in the near future. And the car industry represents almost 4 percent of the U.S. gross domestic product; one of every 10 U.S. jobs are impacted in the U.S. auto industries, and that impacts working families. It impacts our cities, our communities as well.

But, Mr. Chairman, I wanted to ask again, and this is a question I'd like to ask the panel --

REP. FRANK: No, we're not going to be having any questions to the panel so if you could just make --

REP. BACA: But I basically wanted to support this legislation. I think it's important that we deal with it. It impacts the United States, the American people are asking us to do something. This is a step in the right direction. And I believe that we've got to support it. We've bailed out everybody else and what we're doing now is providing a loan, providing assistance to keep the American people working in our communities. Thank you very much.

REP. FRANK: Thank you. In fairness to all the witnesses --

REP. BACHUS: Mr. Frank, we thank you for all of your work and I hope everybody will take a hard look at the bill that you've produced.

REP. FRANK: You're welcome and we'll now call on our next panel. The next panel will come forward I will make my opening statement. We will continue the opening statements if the panel will sit. Please let's move clearly, move quickly. Hey all you people can say hello to each other in Michigan. Let's clear the room and get the panel seated.

END.

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