Panel I of a Hearing of the House Financial Services Committee - Auto Industry Stabilization Plans

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REP. BRAD SHERMAN (D-CA): Thank you, Mr. Chairman.

There are those who are concerned that this proposal is a departure from pristine capitalism. We don't live in a world of pristine capitalism. When we look at the heavy subsidies provided by Japan, Germany, Korea, France and China to their auto industries, we realized how insane it would be for us to go forward without a U.S.- based auto industry.

The worst type of job for America to lose is a manufacturing job. And the worst time to lose a job is right now.

But when we craft the bill, we need to put tough standards in the bill for three reasons. First, they'll maximize the likelihood that the bill will pass on the floor.

Second, it will minimize the number of executives from other industries who drive their cars to Washington, making that plea, well, if you did it for the banks and the auto companies, you need to do it for us.

Finally, it is important that we put in tough provisions in these bills because a careful reading of the written pronouncements of the automobile companies indicates that they themselves are not going to adhere to the kind of tough conditions that the American people expect and that the auto industry needs.

Last hearing, I asked a number of questions for the record. I've gotten responses. My first was whether the companies would seek to keep open American plants and close down plants in other countries. They simply said no, they could not provide that assurance.

The bill needs to provide that you can't close a plant without the approval of the administration and, hopefully, they will use reasonable efforts to preserve American jobs.

I asked whether there would be a warranty fund so that the people buying cars today can be sure that their warranty will be serviced even if, God forbid, one of these companies goes bankrupt. There is no assurance in the plans of that. If we want to protect consumers and to protect their warranty rights, we're going to have to put that in the bill.

I asked about executive compensation and whether there would be a 1 million -- I didn't go for this $1 a year thing, gentlemen, just a million dollar a year limit on the salary, bonuses, stock options and pension plan contributions -- the whole executive compensation plan for any executive. The response was that, no, that assurance could not be given. If we want that limit to apply to the automobile industry, we're going to have to put it in the bill.

And finally -- and I know it's become symbolic and it can be regarded as a red herring, but I do think it's something the American people are now insisting on, and that is the use of private planes. And I know that the executives drove here today, and that creates this image to the American people that the days of private luxury aircraft are over, and yet I'm told by the companies that that is misreading the symbol, and so if we want the limit we've got to put it in the bill.

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