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

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REP. CAROLYN MALONEY (D-NY): Thank you, Mr. Chairman, for holding this meeting and this important hearing.

It is unacceptable for America not to make its own cars. And it is unacceptable for America to continue outsourcing manufacturing and jobs. We have lost well over 22 million manufacturing jobs in recent years. No other country would let the major manufacturer, the major industry, fail in their country. Other countries are reporting that they are moving to help their automobile industry. There are reports that China is helping their industry. That Germany is helping their industry. And I believe that we need to help American jobs and American industry. And I believe in the American worker, that you're going to retool, you're going to move into the 21st century and be more competitive in the world economy because that's what we need to do. You need to be fuel efficient. You know what you need to do, and we are counting on you to make those changes and to regain the prominent position of leadership on manufacturing and automobiles that we have held in the past.

Now I will say that there are a number of my colleagues who believe that we should let the automobile makers file for bankruptcy. But as Nobel laureate and economist Paul Krugman recently reported, and I quote, "If the economy as a whole were in reasonably good shape and the credit markets were functioning, Chapter 11 would be a way to go. But because of the current economic crisis a wide ranging default in Detroit would probably mean loss of ability to pay suppliers which would mean liquidation and that in turn would mean wiping out probably well over a million jobs at the worst possible moment." End quote.

So I am supportive of your efforts because I believe it is necessary and all other available alternatives are far worse. So my first question is if you went to the private sector for your loan, you would not be able to get it or could you elaborate? And as I understand the loan starts out at 5 percent then climbs to 9 percent.

I would also like to ask the panelists do you agree with the assessment of economist Paul Krugman on what the impact of what a bankruptcy would mean in your Big Three and our industry and what would be the overall effect, not just for you, but the overall effect for our nation's economy as we are struggling to stabilize our financial markets and to stabilize our economy and move forward? And I ask anyone to respond.

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