Panel II of a Hearing of the House Financial Services Committee - Auto Industry Stabilization Plan

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REP. EMANUEL CLEAVER (D-MO): Thank you, Mr. Chairman.

I'd like to say "Amen" to the sermon by -- (scattered laughter) -- Bishop Al Green. I do think that he said it all, and did it quite eloquently. And I appreciate your participation. You have very good reflexes.

The issue that I'm concerned about is waiting. And I do think there's a -- there's a difference in how we've handled Wall Street, and how we're handling the automobile industry. All things come to those who wait; sometimes, though, it's just the leftovers from the fellows who got there first. And this is where I think we find the automobile industry.

One of the issues that I would hope that you could help me understand and deal with, I have two automobile plants in my district in Missouri -- Kansas City, Missouri, if we don't act equally fast for GMAC and for Chrysler Financing, it won't matter if we can make cars if we still don't have the capacity to buy them.

So I would like for you to -- if I'm off-base, if you would help me; and if I am, support me.

Professor Sachs? And, thank you for being here again.

MR. SACHS: Thank you. It's an honor always to be in front of this committee.

We absolutely need first to make sure that these companies don't go into default in the next week -- two, three weeks. And second, that we spur demand again. There will be many parts of that next year. Part of it will be automobile financing turned back on, because it's off right now as you know very well.

Part of it will be the overall stimulus program. Part of it will be TARP and its successors working more effectively. So, the demand side and preventing this disaster which we're -- delay is risking, are the two goals that we need to put together.

MR. ALTMAN: I would endorse the --

REP. CLEAVER: Yes, sir.

MR. ALTMAN: -- the need to move quickly.

My fear is that if we move and we do it with a band-aid or two -- I know $4 billion doesn't sound like a band-aid, but they're going to come back very soon to ask for a lot more, and then more, because this recession is not going away in six months. So, we have to be prepared for that.

And I agree with Jeff that we need to have a fiscal stimulus after the new administration comes in to get demand going again. And, so that is part of the package.

REP. CLEAVER: My second -- my final question: Someone, unfortunately, brought up subprime loans in the automobile industry this morning, which was just unfortunate that someone would do that. The economy is not in trouble because we've had foreclosures on Cadillacs -- (laughter) -- or Chevys.

But, do any of you see anything wrong with -- in any agreement, also making sure that to get an automobile loan your credit score doesn't have to be 700 -- 750? I mean, we may need -- yes, Mr. Lester, I'm sure you can respond to this.

MR. LESTER: I think that's what the problem is now.

REP. CLEAVER: Yes.

MR. LESTER: The requirements that the financial institutions, as well as the captives have put on the consumer, no one has the ability -- very few people have the ability to have a 700 FICO score, to go out and buy a Ford Focus, for example.

We are in an economic disaster, and we can't afford that -- for these manufacturers and these dealerships to go away. This country can't take it. You already mentioned that if we go away, the dollar will disseminate (sic).

REP. CLEAVER: Well, so do you think that something like this should be included in any agreement? In any of it?

MR. LESTER: I think if TARP, loosening up -- making the announcement, I think, a week before last, about loosening up and providing access to capital for lenders for auto loans and student loans, that is some -- that is, hopefully, once it gets up and running, that will provide some --

REP. CLEAVER: Yeah. What I'm saying is that, should we have a "de-icer" amendment?

MR. LESTER: Yes.

MR. SACHS: I would not suggest it -- to overburden this specific action right now. This has to be a priority for the next Treasury secretary, that's for sure.

REP. CLEAVER: Thank you.

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