Detroit 3 CEOs Make Headway In Senate Hearing

WASHINGTON, DC December 4, 2008: According to Harry Stoffer, writing for Automotive News, the Detroit 3 CEOs won a warmer reception in Congress today than they did two weeks ago as Senate leaders said they were searching ways to provide emergency loans.

"I don't think we want to walk away without trying to get something done," Christopher Dodd, D-Conn., said after chairing a six-hour Senate Banking Committee hearing on renewed requests from General Motors, Ford Motor Co. and Chrysler LLC for $34 billion in loans.

Many Banking Committee members complimented the Detroit 3 CEOs on the plans they presented for using federal aid and restructuring to become viable for the long term.

But the senators also showed that they -- as well as the House and Bush administration -- remain far from a consensus on how to help the companies.

Today's hearing offered more ideas on how to deal with the industry's crisis. There was talk of creating a powerful board of trustees or auto "czar" to impose concessions on automakers, organized labor, lenders to the car companies and other stakeholders.

Some lawmakers said financial institutions that have gotten money from a $700 billion economic rescue program should make government-guaranteed loans to the Detroit 3.

Others, such as Sen. Richard Shelby of Alabama, the ranking Republican on the committee, were unmoved. They said they believe the companies should restructure in bankruptcy.

But Dodd said he takes seriously warnings that an automaker bankruptcy would be "cataclysmic" for an already weakened economy.

"Maybe history would prove us wrong, but that's a hell of a bet to take," Dodd said.

Dodd and other senators indicated they will look for a way to provide short-term loans, especially to GM and Chrysler, which say they could run out of cash by the end of the year. Then lawmakers could consider a broader, more detailed program when a new Congress and President-elect Barack Obama take office next month.

Said Dodd: "We're not going to write a check for any amount of money without serious conditionality associated with it."

GM, Chrysler, and Ford delivered detailed plans this week to Congress for using federal "bridge" loans and becoming viable companies in the long term.

Act of contrition

Earlier today, GM CEO Rick Wagoner said if Congress demands contrition from the Detroit 3 in exchange for at least $34 billion in emergency federal loans, he was prepared to offer it.

"We made mistakes," Wagoner told committee members.

GM made many decisions that were "right for the times," Wagoner said. But the company failed to build enough flexibility into its operations and did not move fast enough to invest in smaller, more fuel-efficient vehicles for the United States, he conceded.

Wagoner said the Detroit 3 learned a lot from last month's "difficult" congressional hearings on their aid requests. For GM, he said, that process accelerated "a healthy internal review."

GM's restructuring plan promises deep cuts in brands and nameplates, jobs, executive salaries and corporate debt.

Democratic leaders in Congress demanded the plans last month after they slammed the Detroit 3 for failing to make an adequate case for aid. Lawmakers said the company's CEOs appeared tone deaf to public sentiment by coming to Washington in private jets and rejecting calls for personal sacrifice.

Deep differences

Whether the plans -- and a second round of hearings tomorrow -- will persuade Congress to approve the loans is in doubt. GM and Chrysler say they need federal money this month to maintain operations.

Deep differences remain within Congress and between lawmakers and the White House over the source of loan funding -- and whether the Detroit 3 should get any aid. House Speaker Nancy Pelosi, D-Calif., has said that inaction is not an option.

Pelosi and Senate Majority Leader Harry Reid, D-Nev., plan to call Congress back to Washington next week to consider aid proposals.

Wagoner, Ford CEO Alan Mulally, Chrysler CEO Bob Nardelli and UAW President Ron Gettelfinger spent the day answering the bulk of the questions from the Banking Committee. Other witnesses at today's session were:

• Keith Wandell, president of auto-parts supplier Johnson Controls Inc.

• James Fleming, president of the Connecticut Automotive Retailers Association.

• Gene Dodaro, acting comptroller general of the U.S. Government Accountability Office.

• Mark Zandi, chief economist of Moody's Economy.com.

Reporter David Barkholz contributed to this report