Auto Industry Financing and Restructuring Act

From House Majority Leader Hoyer:

WASHINGTON, DC – House Majority Leader Steny H. Hoyer (MD) spoke on the House Floor tonight in support of the Auto Industry Financing and Restructuring Act. Below are his remarks as prepared for delivery:

“This bill is designed to give the automakers the time and space they need to become a competitive, job-creating industry once again. And it is designed to do so while protecting taxpayer dollars. Reconciling those two goals has taken long negotiations and compromises on both sides—but I am convinced that we have come to a sound solution.

“These rescue loans are necessary—not to reward bad decision-making in Detroit, but to protect three million American jobs. Three million livelihoods, three million families depend on the automakers—not only their direct employees, but the workers at their suppliers, the small businesses that serve those workers, and entire communities. Are we really willing to put those workers at risk in this deep recession, after a month in which our country just lost 533,000 more jobs?

“In any economy, and especially in this one, the failure of the automakers would be catastrophic. As John Judis put it recently in the New Republic, without public loans, ‘the industry will disappear the way the American television-manufacturing industry disappeared. American workers and engineers will lose their ability to compete in a major durable goods industry.’ That is the motive behind the $15 billion in emergency bridge loans for the car companies.

“But it is equally important to ensure that those loans lead to real reform—to ensure that we do not find ourselves right back in this same emergency in just a few months’ time. Congress has insisted that the automakers develop detailed plans for long-term viability—that they show us how they intend to build cost-effective, fuel-efficient cars for a 21st-century economy. Those viability plans were presented to Congress on December 2nd, and we have examined them in detail.

“Now, this bill will hold the automakers to their promises. They will be accountable to Congress and the Administration, as well as an Administration-appointed ‘car czar,’ who will oversee the efforts of the industry and its stakeholders to cut costs, restructure debt, and renegotiate labor contracts. Just like any other lender, the federal government is insisting that the recipient of its loans be on a plausible path to profitability. If the automakers stick to their plans for viability, more assistance is possible. But if the Administration-appointed official finds that they have not made adequate progress on restructuring by March 31st, the loans will be called, and the automakers will be a step closer to bankruptcy.

“This bill also includes safeguards for the taxpayers: It lets the American people profit if and when the value of the car companies recovers, and it guarantees that taxpayer money will not fund lavish executive bonuses or golden parachutes.

“Mr. Speaker, if we act today, we can seize the chance for an American auto industry that is leaner, greener, and once more competitive. But if we do nothing, we face the risk that, sometime soon, there will be no American auto industry to speak of. So I urge my colleagues to support this bill. It has the power to protect innumerable American jobs, and its strong safeguards will ensure that we are authorizing anything but a bridge loan to nowhere.”

I take anything from Hoyer with a grain of salt (hard to do on a low-salt diet btw!) and I don't even get in the mood to pretend to be an economist, so I really don't know. On its face, IF the safeguards are as strong as they appear to be, it looks like a needed step. On the other hand, I detest fear-mongering. I just don't know how much fear is warranted here. What do you think?

And here is the rest of it.